Gold Falls Under Pressure from Hawkish Fed Outlook and Rising Oil Prices
Gold prices reversed their gains on Monday, falling as investors reassessed the Federal Reserve's rate outlook after Chair Kevin Warsh's hawkish inflation message. Rising oil prices added to concerns, although gold remains about 10% higher in August and is heading for its strongest monthly gain since January.
The Fed's hawkish shift has pushed investors to raise expectations for another rate increase, with markets now pricing roughly a 57% probability of a September hike. This shift weighs on bullion because gold does not pay interest, making it less attractive when traders expect rates to remain higher.
ANZ analysts said the latest retreat reflected precisely that shift, but expect the downside to remain limited as the debasement trade continues to attract buyers. The pressure is also coming from energy markets, with oil prices reaching around $89.38 a barrel on Monday after U.S. forces struck Iranian launchers.