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Gold slips to near $3,975 as Middle East risks boost rate-hike bets

Gold fell to an eight-month low in early Asian trade as rising Middle East tensions reinforced expectations that the Fed stays restrictive, with traders pricing in nearly a 55% chance of a September hike.

Reported · Written up by our desk · Major Pairs

Gold prices (XAU/USD) declined to near an eight-month low around $3,975 during early Asian trading on Friday, extending the metal’s downside.

FXStreet links the move to growing Middle East tensions that are heightening inflation concerns and keeping US interest rate expectations elevated, which can weigh on bullion because it does not pay a yield.

The pressure builds on reports that Iran has asked Yemen’s Houthi movement to stand ready to close the Red Sea oil route if the US strikes Iranian power infrastructure, a step described as a new threat to global energy supplies. The development followed President Donald Trump’s earlier threat to attack Iran’s power infrastructure.

FXStreet also notes that the move comes as traders look past some inflation optimism, with the US CPI slowing in June and PPI declining, while FedWatch pricing shows nearly a 55% odds of a September rate hike, according to the CME FedWatch Tool. The outlet adds that central banks are major gold holders, citing World Gold Council data that they bought 1,136 tonnes of gold worth around $70 billion in 2022, the highest yearly total since records began.

Latest closeGold $3,981.40 ▼1.6%

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