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Gold slides toward a nearly two-week low on hawkish Fed bets

Traders are pricing roughly a 60.0% chance of a September Fed rate hike, while oil-driven inflation fears and US-Iran tensions keep pressure on non-yielding gold.

Reported · Written up by our desk · Major Pairs

Gold prices are slipping toward a nearly two-week low as fresh selling emerges for XAU/USD amid rising expectations for tighter Federal Reserve policy, according to FXStreet. The move follows an intraday pop toward the $4,472 area earlier, before the metal fell during the Asian session.

FXStreet reports that the shift reflects traders reacting to Federal Reserve Chair Kevin Warsh’s Jackson Hole remarks, where he said inflation is running hot and rates may need to go higher if progress on easing price pressures is not made. Markets are now pricing in about a 60.0% chance of a September rate increase, with CME Group’s FedWatch Tool indicating an 88.0% probability of a December increase, factors that strengthened the US dollar and weighed on gold.

FXStreet also links the selling bias to oil-driven inflation concerns, after US-Iran tensions escalated. US forces struck rocket launchers on Iran’s Larak Island on Sunday and Iran retaliated by launching ballistic missiles at two US bases in Jordan, while the US said new secondary sanctions are likely to be unveiled weekly, all of which has pushed crude higher.

Despite the broader supportive backdrop for the dollar, FXStreet notes that soft US Treasury bond yields are limiting follow-through safe-haven demand for gold. Traders are also watching upcoming US macro releases, including the Nonfarm Payrolls report due Friday, while a technical break below the 100-period simple moving average on the 4-hour chart has been cited as a trigger for bearish positioning.

Latest closeGold $4,504.10 ▼2.3%|WTI crude $83.44 ▼0.1%

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