Gold Prices Slide as Fed Rate Hike Expectations Surge

Global gold prices slid for the second consecutive session on September 22 as investors increasingly anticipate tighter monetary policies from the U.S. Federal Reserve (Fed). Spot gold fell 0.2% to $4,336.21 per ounce, while U.S. gold futures settled at $4,376.40 per ounce, also down 0.2%. This downward trend reflects a shift in market expectations regarding interest rates, with the probability of a Fed rate hike in December surging to 90%, up from 80% just one week prior.

The repricing follows hawkish signals from central bank officials, including St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee, who emphasized the need for continued tightening due to robust demand and climbing energy prices keeping inflationary pressures elevated.

Bart Melek, Global Head of Commodity Strategy at TD Securities, noted that the market continues to aggressively price in the likelihood of Fed rate hikes, even as oil prices trend slightly lower. The strengthening U.S. dollar also weighs on gold prices.