Gold steadies after sharp drop as traders assess Fed outlook, Middle East risks
Gold (XAU/USD) steadies on Tuesday after suffering a sharp sell-off at the start of the week. The move appears to be a corrective bounce, as the broader narrative remains tied to expectations of further Federal Reserve (Fed) interest rate hikes.
Gold steadies at $4,152 after a sharp sell-off on Monday, as traders assess the Federal Reserve's outlook and Middle East risks. The metal fell nearly 4% to a low of $4,110, its lowest since August 5, driven by rising US Treasury yields and heightened inflation concerns due to the US-Iran standoff around the Strait of Hormuz. The 10-year US Treasury yield sits near 5.24%, down slightly from Monday's peak of 5.27%.
Iranian Foreign Minister Abbas Araghchi reported indirect talks with the US through Qatari mediators, but both sides remain far apart on key issues. The CME FedWatch Tool indicates a 72% chance of another rate hike in October, as the Fed remains hawkish. A stronger US Dollar makes Gold more expensive for non-dollar buyers. The daily chart shows XAU/USD bearish near the Bollinger Bands and with momentum indicators hinting at persistent selling pressure.
Resistance lies at $4,157, $4,325, and $4,494, while support is at $4,100 and $4,000. Inflation influences Gold's value, with higher rates making it less attractive. The macro analyst covers forex and commodities markets, focusing on economic indicators and central bank decisions.
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