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.
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.
Oil prices ease as fresh Middle East diplomacy raises hopes of peace - NewsTmes.com.ng
Oil prices edged lower on Tuesday as fresh diplomatic efforts to ease tensions in West Asia raised hopes of progress in negotiations between the United States and Iran, although continuing attacks on Saudi Arabia and concerns over energy supplies kept markets on edge. Brent crude futures fell by approximately 0.86 per cent to $114.81 per …
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