Shares of Goldman Sachs Physical Gold ETF plunged 3.0% to $44.06 on August 28 after Federal Reserve Chair Kevin Warsh used his Jackson Hole address to signal that interest rates may need to stay elevated longer than markets had hoped, sending gold prices sliding and forcing investors to reassess the metal's near-term appeal. Gold ETF Hit by Warsh's Hawkish Jackson Hole Debut — But Can Central Bank Buying Cushion the Blow for AAAU Holders?

Shares of Goldman Sachs Physical Gold ETF (AAAU) slid 3.0% to $44.06 on Friday — their sharpest single-day drop in months — after Federal Reserve Chair Kevin Warsh used his first Jackson Hole keynote to warn that inflation remains stubbornly high, sending gold reeling and the dollar surging. Warsh said inflation is "still too high" and suggested the central bank may have to raise interest rates in the coming months. The selloff was surgical: gold fell while broader equities held steady, signaling this was a rate-fear trade, not a panic.

  • Warsh Refused to Give Markets a Roadmap, and That Spooked Gold Bulls. Warsh declared, "We should not indulge a regime in which market participants are looking primarily to the Fed for their next trade."

He added that while summer inflation readings "were better than expected, they do not tell me that underlying trends have meaningfully improved." For gold holders, this matters because gold pays no interest. When the Fed hints at higher rates, Treasuries and savings accounts become more attractive relative to sitting in a non-yielding metal, and money flows out.

  • Treasury Yields and Hot Inflation Data Did the Damage Before Warsh Even Spoke. The 10-year Treasury yield sat at 4.68% as of August 27, with the 30-year at 5.20%.

July's PCE inflation — the Fed's preferred measure — rose 3.7% year-over-year, above the 3.6% forecast. Higher yields raise the "opportunity cost" of owning gold — essentially, you give up guaranteed income to hold a metal that produces none. Markets are now pricing a 74% chance of a December rate hike , a headwind for AAAU in the near term.

  • Gold Retreated From a Three-Month High, but the Pullback Looks Shallow — So Far. Spot gold touched $4,696.18 on Tuesday before pulling back to the $4,580–$4,602 range by Friday . AAAU had climbed from $45.52 to $46.00 over the prior week, so today's drop effectively erases a week of gains. Still, gold remains up sharply year-over-year.

  • Central Banks Are Quietly Building a Floor Under Gold Prices. Central banks purchased 288.9 tonnes of gold in Q2 2026 — up 62% year-over-year and the strongest second quarter on record.

A record 45% of central banks plan to increase gold holdings over the next twelve months. This structural buying by governments worldwide, driven by geopolitical hedging and dollar diversification, means that even as rate fears create short-term selling pressure, long-term demand anchors remain intact. For AAAU shareholders, the question is whether hawkish Fed rhetoric is a brief squall or the start of a sustained headwind against a historically powerful tailwind of sovereign accumulation.