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Gold slips below $4,100 ahead of Fed decision as dollar firms
XAU/USD was down 1.2% to about $4,027, with traders pricing roughly a 35% chance of a 25 bps rate hike that could threaten the $4,000 support level.
Gold futures fell back on Tuesday as a firmer US dollar weighed on prices, with XAU/USD trading around $4,027, down 1.2% on the day after failing to hold gains above $4,100.
Oil extended its pullback as hopes grew of progress toward ending the US-Iran conflict, but the article notes that prices remain elevated and continue to feed inflation concerns.
Attention turns to the Federal Reserve decision on Wednesday, where expectations are for the federal funds rate to stay at 3.5% to 3.75%. According to the CME FedWatch Tool, traders were pricing about a 35% chance of a 25 bps increase, with hawkish bets reportedly strengthened since Fed Chair Kevin Warsh’s first policy meeting in June.
The outlook for gold hinges on whether policymakers adopt a hawkish stance. The article says a surprise rate hike could push gold toward and below $4,000, while a less hawkish outcome that treats energy-driven inflation as temporary could weaken the dollar and help gold defend that level.
Latest closeGold $4,078.90 ▲0.3%