Gold slides as surging oil prices, Treasury yields bolster Fed rate-hike expectations

Gold's journey began poorly on Monday as it lost some 0.85% of its value, sinking to a one-month low of $4,253. The week is marked by the Federal Open Market Committee's decision. The US Dollar and the cost of US Treasury yields have soared due to a surge in energy prices. This has put pressure on the non-yielding metal.

In recent developments, a Houthi attack on Saudi Arabia's pipeline resulted in a 7 million barrels per day reduction in oil production. The US crude benchmark, West Texas Intermediate, surpassed the $100 mark. Speculations over potential inflation increase, following last week's US PPI and CPI reports, have led to a rise in US Treasury yields, with the 10-year reaching an all-time high of 5% since 2023.

The US Dollar Index, which measures the performance of the American currency against other currencies, is up by 0.32% at 99.41. There is a 93% chance of a quarter-point rate hike by the Federal Reserve on Wednesday, as per a Reuters poll. The Bank of Japan is also expected to raise rates by 25 basis points to 1.25% on Friday.

Gold has historically been used as a store of value and medium of exchange. Currently, it is seen as a safe-haven asset, providing protection during turbulent times. Central banks, particularly those in emerging economies, are rapidly increasing their gold reserves.

Despite its role as a hedge against inflation and currency depreciation, rising global bond yields have affected its appeal. Gold is closing Monday's session above the 100-day SMA of $4,351 could pave the way for further upside. However, if it falls below this level or $4,300, it may lead to a downward trend. The Relative Strength Index (RSI) suggests further downside.

The price of Gold can be influenced by various factors, including geopolitical tensions and inflation fears. Bitcoin, Ethereum, and Ripple are also showing positive trends. The Fed hike bets have increased following the PPI and CPI reports.