Gold fell by more than 3.5% over two sessions, with the market pricing in a probability of more than 60% of a Fed rate hike
Kyiv • UNN
The price of gold stabilized near $4,445 after a two-day decline. Traders assess the chance of a Fed rate hike at more than 60%.
Gold prices stabilized after a two-day decline of more than 3.5%, while traders increased bets on tighter monetary policy by the U.S. Federal Reserve. Bloomberg reports, UNN writes.
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Bullion traded near $4,445 per ounce. The market is under pressure from escalating tensions between the United States and Iran, which have heightened concerns about further increases in energy prices and inflation.
The U.S. military struck an island in the Strait of Hormuz, after which Iran responded with attacks on the United Arab Emirates and Jordan. Against this backdrop, oil continued to rise after its biggest increase in three weeks.
The market prices in a more than 60% probability of a rate hike
Higher energy prices could intensify inflationary pressures in the United States and force the Fed to raise interest rates. This is usually a negative factor for gold, as the precious metal generates no interest income.
Expectations of a rate hike also intensified after a statement by Fed Chair Kevin Warsh, who promised to continue fighting inflation. Traders currently assess the probability of a rate hike at the September 15–16 meeting at more than 60%.
At the same time, gold rose by nearly 10% in August, marking its biggest monthly gain since January. As of morning trading in Singapore, the spot price of gold had risen 0.2% to $4,448.64 per ounce. Silver traded at approximately $66.56 per ounce.