Gold Falls as Fed Meeting Begins with Rate Hike Expectations

The US Federal Reserve's two-day policy meeting has begun, and investors are eagerly awaiting the outcome. The market is currently expecting a 25 basis point rate hike, with interest rate futures indicating a probability of between 86% to 93%. Spot gold prices have fallen by 0.11%, trading at $4,293.97 per ounce, while spot silver prices have edged higher by 0.97%, reaching $63.84 per ounce.

The current market positioning is mainly driven by interest rate repricing after the release of the Consumer Price Index (CPI) and Producer Price Index (PPI). Last week's producer and consumer inflation data failed to provide sufficient evidence to dispel expectations of a Fed rate hike; meanwhile, the new surge in oil prices has further reinforced the market's tendency for rate hikes.

Gold is currently in a contradictory environment: escalation of tensions in the Gulf and shipping risks can trigger safe-haven buying, but higher oil prices will intensify inflationary pressures, push up US Treasury yields, and further justify continued Fed rate hikes. The Strait of Hormuz remains a key geopolitical variable affecting oil prices, inflation expectations, and safe-haven buying.