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Gold stays under $4,100 as Fed hike bets and Middle East tensions swirl
Investors are pricing a possible Fed rate hike in September or December after June CPI cooled, while higher crude oil prices add an inflation risk.
Gold is edging lower in intraday trade as it fails to gain acceptance above the $4,100 level, keeping the metal offered heading into the European session, according to FXStreet.
FXStreet reports that the slide persists despite a softer US CPI print, with June headline CPI down 0.4% month over month versus expectations for a 0.1% decline, and core CPI flat versus a 0.3% consensus estimate. On a yearly basis, headline CPI fell to 3.5% and core CPI to 2.6%, both missing forecasts, which initially pushed traders to trim rate hike expectations and weighed on the US dollar, helping gold hold above the $4,000 psychological mark.
The initial dollar move faded quickly after Federal Reserve Chair Kevin Warsh told Congress the central bank has no tolerance for persistently high inflation and also emphasized the strength of the US economy, undercutting the case for easier policy. FXStreet adds that rising crude oil prices, alongside escalating US-Iran tensions and disruption risk tied to the Strait of Hormuz, is seen as an inflation risk that could support further Fed tightening.
According to FXStreet, CME Group’s FedWatch Tool shows traders are pricing the possibility of a rate hike by the Fed either in September or December, while geopolitical risks related to the Middle East have also limited aggressive bearish bets on the US dollar. The overall setup suggests gold remains vulnerable but continues to find support near $4,000.
Latest closeGold $4,058.20 ▲1.5%|WTI crude $79.90 ▲2.2%