Gold Bounces Back Above $4,300 as Fed Decision Looms
Gold prices have recovered from their sharp reversal earlier this week and are now above $4,300 per ounce. The rebound comes just hours before the Federal Reserve announces its September decision.
The markets assign a 93% chance of a 25-basis-point hike, which would take the federal funds target to 3.75%-4.00%. Traders have already priced in this increase with high conviction, so any surprises from Fed Chair Kevin Warsh's guidance could lead to a sustained reaction.
The macro backdrop remains challenging for gold, with US inflation above the Fed's 2% target and oil prices above $100 per barrel. Treasury yields have also surged, reaching 5.041% on Tuesday, their highest level since July 2007.
A break above $4,400 would give bulls an important technical victory, while renewed weakness below $4,300 would reopen the correction.