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Gold retreats on stronger dollar; traders brace for Fed
A stronger dollar and higher Treasury yields pressured bullion as traders priced an 80% chance of a December rate hike, CME FedWatch showed.
- On Tuesday, gold prices declined as the dollar strengthened, while oil prices rose to around $116 a barrel amid renewed Houthi attacks on Saudi Arabia highlighting persistent supply risks in the Middle East.
- ActivTrades director Ricardo Evangelista said gold remains under pressure from a stronger dollar and elevated Treasury yields, as persistent inflation concerns reinforce expectations that the Federal Reserve will maintain a restrictive policy stance.
- Traders are pricing in an 82% probability of a rate hike in December, according to the CME's FedWatch Tool, as investors believe the pause in rate increases will not last long.
- Investors are awaiting Personal Consumption Expenditures data due on Thursday, which the Fed watches most closely as it targets 2 per cent inflation.
- Stronger-than-Expected inflation could push gold below $4,000, potentially towards $3,900, Evangelista added, as higher interest rates increase the opportunity cost of holding non-yielding gold.
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Global gold prices are back in the spotlight after falling below the psychological level of US$4,000 per troy ounce.
The price of Brent's North Sea barrel, for delivery in December, lost 0.78 percent, up to $115.81, after falling during the session to a minimum of $114. Its American equivalent, the West Texas Intermediate barrel (WTI), for delivery in the same month, fell back 1.46 percent, up to $101.76.
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Today, oil prices have fluctuated between falling and rising as hopes for calming the Middle East grow, while gold has fallen as a result of the rise in the dollar and the expectation of the Federal Reserve's decision on interest rates.
Coverage Details
Total News Sources21
Leaning Left4Leaning Right3Center2Last UpdatedBias Distribution45% Left
Bias Distribution
- 45% of the sources lean Left
45% Left
L 45%
C 22%
R 33%
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