Gold falls more than 2% amid expectations of Fed rate hikes — Asharq Al-Awsat

Gold prices on the global market fell by more than 2% on Monday amid rising oil prices, inflation concerns and expectations of further interest rate hikes by the US Federal Reserve. As of 03:57 GMT, the spot price of gold had fallen 2.1% to $4,198.10 per ounce. US gold futures also declined 2.1%, to $4,231 per ounce, Asharq Al-Awsat reports.

Oil and bond yields

KCM Trade chief market analyst Tim Waterer said that high bond yields and oil prices are weighing on the gold market. According to him, mixed signals regarding oil flows are keeping investors focused on inflation risk.

Oil rose slightly after Iran said that the conflict with the United States and Israel could be resolved only through diplomatic means. This came after US President Donald Trump said he had rejected an Iranian proposal to open the Strait of Hormuz and end the hostilities.

Expectations for Fed decisions

Earlier this month, the Fed raised its target rate range by 0.25 percentage points, to 3.75–4%. According to the CME FedWatch Tool, traders put the probability of another rate hike in October at 68%.

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Rising energy prices can intensify inflation by increasing costs across the economy. Gold is traditionally considered a hedge against inflation, but high rates raise the opportunity cost of holding the non-yielding metal.

This week, investors are awaiting US data on job openings, ADP employment, the personal consumption expenditures price index and nonfarm payrolls. Waterer noted that stronger-than-expected inflation or labor market readings could provide further support for bond yields and increase pressure on gold.

Among other precious metals, silver fell 3.4% to $62.08 per ounce, platinum declined 2.7% to $1,730.78, and palladium dropped 2.8% to $1,231.46.