Gold declines to near $4,350 on rising odds of Fed rate hike
Gold price (XAU/USD) declines to near $4,365, snapping the two-day winning streak during the early Asian session on Tuesday. The precious metal loses ground on the prospect of further monetary tightening by the US Federal Reserve (Fed). Traders will keep an eye on the Fedspeak later on Tuesday.
Gold prices slipped to nearly $4,365 on Tuesday, marking a two-day winning streak's end. This decline comes as traders consider the possibility of further interest rate hikes by the U.S. Federal Reserve (Fed). The Fed raised rates by 0.25% to the 3.75%-4.0% range last week, boosting the odds of a December hike to 90.3%, according to the CME FedWatch Tool.
St. Louis Fed President Alberto Musalem suggested additional rate increases might be needed to meet the central bank's inflation target. Higher interest rates typically hurt gold, as it doesn't pay interest, making yield-bearing assets more appealing. Despite concerns about tighter US monetary policy, some factors, like Middle East diplomacy hopes and easing supply concerns, might limit gold's losses.
However, ING analysts warn that tighter monetary policy remains a headwind for bullion, but supportive ETF holdings and central bank buying could help curb downside.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
Also reported by 1 other outlet
- Gold edges lower as traders weigh oil prices and Fed rate path businesstimes.com.sg
