Gold bears retain control as markets brace for Fed rate hike

Gold prices have been slipping lower as investors brace for a potential Federal Reserve rate hike on Wednesday. The non-yielding metal is being pressured by a stronger US Dollar, higher US Treasury yields, and expectations of tighter monetary policy. Despite the decline, trading volume has been modest, with traders holding back on large bets ahead of the Fed's decision.

XAU/USD is currently trading near $4,280, just above the month's low of $4,253. US Treasury yields have climbed to multi-year highs, reaching 5% for the 10-year yield, which signals increasing demand for the US Dollar. The US Dollar Index is also near two-week highs, reflecting the currency's strength. While the Federal Reserve has kept interest rates steady, energy prices and geopolitical tensions are driving inflation concerns, making a rate hike more likely.

Market participants are pricing in the possibility of a hike at the upcoming Federal Open Market Committee meeting, with expectations of three more rate hikes this year. However, if policymakers signal a broader tightening cycle, Gold could face further downside pressure. Technical analysis suggests that XAU/USD is in a bearish near-term trend, with price trading below key moving averages and showing increasing bearish momentum.