Gold slides below $4,100 as FOMC Minutes signal further Fed hikes

Gold prices slid below $4,100 on Wednesday as Federal Reserve minutes indicated further interest rate hikes. The metal rebounded to the $4,100 level following the release of the FOMC minutes, which showed all members backing the September rate hike. The precious metal traded at $4,115, down 1.16%, after peaking at a two-month low of $4,066 earlier in the day.

The minutes revealed that some officials viewed the rate increase as a precautionary measure to counter persistent inflation above target, while others believed it was the start of a tightening cycle aimed at curbing investment and spending. The minutes also indicated that a few members saw the decision as a response to inflation broadening to other prices and matching a higher-than-expected neutral interest rate.

Federal Reserve members anticipate additional rate hikes by year-end, according to the minutes. Money markets have discounted a potential rate hike at this month's meeting, with odds at 19%, and a hold at 80%, according to Prime Terminal. The US 10-year Treasury note yield decreased by one basis point to 5.27% following the release of the minutes.

Meanwhile, the US Dollar Index (DXY) rose by 0.40% to 102.24. China's central bank continued to purchase gold for the 23rd consecutive month, providing potential support for the yellow metal. Oil prices, particularly WTI, have declined, contributing to the drop in gold prices. The overall trend suggests further weakness in XAU/USD in the near term, with price action respecting lower highs and lower lows.

For gold to recover, it must surpass the $4,200 level and challenge key ceiling levels at the 100- and 50-day Simple Moving Averages (SMAs).