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Gold slides after Waller warns CPI could justify a Fed hike

XAU/USD fell nearly 3% below $4,000, and traders are watching US CPI and Fed Chair Kevin Warsh’s testimony for renewed rate hike expectations.

Reported · Written up by our desk · Major Pairs

Gold prices fell sharply on Monday, with XAU/USD dropping nearly 3% to trade below $4,000 after Federal Reserve Governor Christopher Waller said the Fed should consider interest rate hikes if US CPI rises this week. FXStreet said traders are now focused on whether upcoming inflation data and subsequent Fed signaling will reinforce a hawkish shift.

FXStreet reported that Waller framed a higher core inflation print as a factor that could force near term consideration of a rate hike, even as he suggested it is still credible inflation could reach the Fed’s 2% goal without higher rates. The report also pointed to continued support from the view that the labor market is closer to the Fed’s maximum employment target.

Alongside the rate outlook, geopolitics added pressure on the metal, the outlet said. It noted fighting between the US and Iran over the weekend and reported that Tehran said it closed the Strait of Hormuz to tanker traffic, contributing to a rise in energy prices.

The story said investors have priced in 33 basis points of Fed tightening toward the end of the year, according to Prime Terminal data, and highlighted upcoming US inflation data and Kevin Warsh’s congressional testimony as key drivers. FXStreet added that support levels being watched include roughly $3,941, with a breakdown potentially exposing a lower swing low near $3,886.

Latest closeGold $4,011.00 ▼2.3%

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