Gold Prices Struggle Near $4,400 Amid Oil Price Surge and Fed Rate Hike Expectations

Gold prices struggled to break above $4,400 on Wednesday as investors weighed higher oil prices and expectations of a Federal Reserve rate hike. The precious metal rebounded from a three-day losing streak but failed to extend its recovery.

The recent uptick in oil prices, driven by tensions between the US and Iran, has put upward pressure on inflation concerns and heightened the likelihood of a Fed rate increase. West Texas Intermediate (WTI) oil traded around $93.00 per barrel, near its highest level since June 8, with a gain of about 4.25% so far this week.

As interest rates rise, gold tends to lose appeal due to higher borrowing costs favoring interest-bearing assets. The benchmark 10-year US Treasury yield traded around 4.81%, near its highest level since November 2023, with traders pricing in a 60% chance of a 25-basis-point rate hike at the Fed's next meeting.

Looking ahead, gold's price movement will remain sensitive to Fed rate expectations and Middle East developments. Traders await US economic data releases, including the ADP Employment Change 4-week average and details on the US Treasury's expanded bond-buyback program.