Gold prices dropped sharply on Friday, declining nearly 3% as investors increased expectations that the U.S. Federal Reserve could raise interest rates in September.

Spot gold fell to about $4,567 per ounce, its lowest level since August 20, while December U.S. gold futures ended at approximately $4,529.90 per ounce. The decline left gold down around 2.9% for the week, following Tuesday’s move to a three-month high near $4,696.

The sell-off followed comments from Federal Reserve Chair Kevin Warsh, who indicated that policymakers may need to take further action if inflation does not show sufficient progress toward the Fed’s 2% target. His remarks prompted traders to significantly increase expectations for a September rate increase.

According to CME FedWatch data, markets were pricing in roughly a 58% probability of a September rate hike, up from 36% before Warsh’s comments. Expectations for a December increase also rose to about 89%.

Higher interest rates generally weigh on gold because the metal does not generate interest or other income. The dollar also strengthened to its highest level in more than a week, adding further pressure because gold is priced in U.S. dollars and becomes more expensive for buyers using other currencies.

Demand in India weakened as well, with local gold discounts widening amid speculation that the government could reverse a recently increased import duty.

Other precious metals also moved sharply. Silver declined 3.5% to around $66.81 an ounce, while platinum slipped 0.6% to about $1,835. Palladium moved in the opposite direction, gaining approximately 5.3% to $1,422 an ounce.

Bottom line: Gold’s decline reflects a shift in interest-rate expectations. If markets increasingly anticipate tighter U.S. monetary policy, higher yields and a stronger dollar could continue to challenge gold prices.