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Gold slips from two-week high as energy and Fed hike bets diverge

Gold is still in an intraday bullish tone, but FedWatch shows traders see about an 88% chance of at least one rate increase by year end.

Reported · Written up by our desk · Energy Transition

Gold (XAU/USD) eased slightly from a two-week high, though it maintained an intraday bullish bias in the first half of the European session, according to FXStreet.

FXStreet links the move to shifting expectations for the US dollar and interest rates. Hopes that US-Iran diplomacy could reduce energy prices and temper hawkish Fed expectations have weighed on the USD, while USD profit-taking also followed a strong rise over the prior week.

At the same time, developments in the Middle East raised the risk of a wider regional conflict and a potential shortfall in global energy markets. The US said it completed its 11th night of strikes on Iran early Wednesday, while Iran said its forces struck two oil tankers near the Strait of Hormuz, and Yemen's Houthis opened a naval blockade against Saudi Arabia, lifting crude oil to a fresh high since June 12.

Those energy risks are feeding concerns about energy-driven inflation and keeping the Fed on a tighter path. FXStreet cited the CME Group FedWatch Tool, which indicates traders are pricing an 88% chance the Fed will raise borrowing costs at least once by the end of the year, a setup that could limit upside for non-yielding gold and favor more two-way trading near term.

Latest closeGold $4,117.00 ▲1.1%|WTI crude $87.52 ▲3.1%

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