Gold declines below $4,150 as rising Fed hike expectations outweigh US-Iran deal hopes
Gold price (XAU/USD) loses ground to near $4,125 during the early Asian trading hours on Tuesday. Rising bets of further US interest rate hikes following a stronger-than-expected US Nonfarm Payrolls (NFP) report weigh on the precious metal.
Gold prices slipped below $4,150 amid heightened expectations of additional U.S. interest rate increases, despite optimism surrounding the U.S.-Iran deal. The recent robust U.S. Nonfarm Payrolls report, showing a surprising 165,000 jobs added in October, bolstered the belief that the Federal Reserve may maintain higher rates for an extended period.
Traders now estimate an 84.0% chance of a December rate hike, up from 72.8% pre-employment figures. Meanwhile, declining crude oil prices may alleviate inflation worries and curb the metal's decline. However, the yellow metal faces challenges from soaring U.S. bond yields and a weakening dollar, which weigh on its appeal as a hedge against inflation and currency depreciation.
Technical analysis indicates gold is currently in a range between the 100-day SMA ($4,200) and the 20-day Bollinger middle band ($4,065), with a potential break above the latter signaling a possible upward trajectory.
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