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Gold rises to a two-week high as Middle East tensions and Fed bets weigh
Gold is trading near the $4,000 area, supported by inflation and rate-hike expectations ahead of the July 28 to 29 FOMC meeting, when FedWatch shows a 28% July hike probability.
Gold climbed to a two-week high on Wednesday, with XAU/USD edging toward the $4,000 level as traders weighed renewed Middle East tensions and the Federal Reserve’s policy outlook, according to FXStreet.
The article said the United States carried out an eleventh straight night of strikes on Iran, while Tehran responded with attacks targeting Bahrain, Kuwait and Jordan, disrupting energy supply through the Strait of Hormuz and pushing oil higher again. That has added to inflation concerns, supporting expectations that the Fed will keep rates higher for longer.
FXStreet added that higher borrowing costs make interest-bearing assets more attractive and reduce the appeal of gold, while a firm US dollar and elevated Treasury yields limited the metal’s ability to extend its rebound. It also noted gold may struggle to stage a stronger recovery until inflation worries ease and bets for additional Fed hikes cool.
In the near term, FXStreet said gold is likely to trade within a range as markets brace for the July 28 to 29 FOMC meeting, with the CME FedWatch Tool showing the probability of a July rate hike rising to 28% from 10% a week ago. The odds of a September hike were cited at 69%, and the report placed near-term technical resistance near $4,200.
Latest closeGold $4,117.00 ▲1.1%