Gold weakens below $4,400 as US Treasury yields surge, Fed rate hike bets rise
Gold (XAU/USD) extends its pullback from the more-than-three-month high touched last week and falls to a fresh two-week low on Tuesday. Rising expectations of Federal Reserve (Fed) interest rate hikes and fresh tensions in the Middle East remain the main drivers behind the latest leg lower.
Gold prices slipped below $4,400 as rising US Treasury yields and anticipation of Federal Reserve interest rate hikes weighed on the metal. XAU/USD fell to a fresh two-week low of around $4,376 on Tuesday, down approximately 1.60% for the day. Fed Chair Kevin Warsh's comments on inflation at the Jackson Hole Symposium reignited expectations of early rate hikes, with a 65% probability now seen at the September meeting according to the CME FedWatch Tool.
The US Dollar strengthened, seen in the DXY reaching a two-week high of 99.72, while US 10-year Treasury yields surged to around 4.80%. Stronger US Dollar makes dollar-denominated gold more expensive for overseas buyers, and higher Treasury yields increase the opportunity cost of holding non-yielding metal. The technical picture shows XAU/USD below the 200-day and 100-day SMAs, with support around $4,350 and potential further decline to $4,267 and $4,149 if the breakout fails.
On the upside, resistance sits at $4,432 before key support around $4,530 and $4,534. Economic data releases will influence market sentiment in the coming days, with US ISM PMI, JOLTS Job Openings, and ADP Employment Change reports on Tuesday and Friday.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
