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Gold rises near one-week high as USD softens, but stays below $4,100
FedWatch pricing points to an 83.0% chance of a year-end rate hike, while Strait of Hormuz disruption and a Yemen blockade keep energy and inflation concerns elevated.
Gold held near a one-week high in early European trading as the US dollar weakened, but the precious metal remained capped below $4,100, FXStreet reported.
FXStreet cited hopes for a diplomatic resolution between the US and Iran as a factor weighing on the USD's reserve status, which typically supports non-yielding commodities like gold. At the same time, investors are balancing those hopes against inflation risk from energy supply disruptions.
The report said restricted traffic through the Strait of Hormuz has disrupted global oil supplies, and Yemen's Iran-aligned Houthis announced a maritime blockade against Saudi Arabia. Those developments are fueling worries that the US Federal Reserve may stay hawkish, supporting the dollar.
According to the CME Group's FedWatch Tool referenced by FXStreet, traders are pricing in about an 83.0% probability that the Fed will raise borrowing costs by the end of the year. The article also pointed to the risk of a broader regional conflict, after the US carried out a 10th consecutive night of strikes on Iran, which could further lift the USD and limit gold's upside.
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