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Gold retreats as Fed hike bets and USD strength weigh
Gold is pressured by a near 80% market-implied chance of a 2026 rate hike, while oil-related inflation risks remain in focus.
Gold prices pulled back after falling more than $100 from their highest level since June 5, keeping a bearish tone around the $4,375 to $4,370 area during the first half of the European session, FXStreet reported.
The initial reaction to evidence of moderating US inflation faded quickly as investors refocused on potential inflation flare-ups tied to energy prices. FXStreet cited US CPI data showing headline inflation easing from 3.5% to 3.4% year over year in July, with the core measure rising 0.2% on the month and 2.5% on a year basis.
Concerns about oil-driven inflation and the prospect of US tightening supported the US dollar, FXStreet said. The outlet pointed to the CME Group’s FedWatch Tool, which indicated traders are pricing in nearly an 80% chance of a Fed rate increase in 2026, and said the USD Index climbed to a two-week high.
Risks tied to Middle East tensions also factored into the outlook. FXStreet noted the US-Iran standoff and escalating attacks in the Red Sea and Bab el-Mandeb that have lifted war-risk premiums for crude, and added that traders are now looking to Thursday’s US Producer Price Index and Weekly Initial Jobless Claims for fresh signals.
Latest closeGold $4,467.10 ▲1.9%|WTI crude $82.68 ▼0.6%