Gold Retreats as Fed Hike Bets Rise Amid Middle East Tensions

Gold prices retreated by 0.40% on Monday after Federal Reserve Chair Kevin Warsh's hawkish remarks last Friday, sparking speculation of a possible rate hike at the September meeting.

The comments led to increased bets on a Fed rate hike, with money markets pricing in at least 26 basis points of tightening towards year-end and odds standing at 64% for a hike and 36% for keeping the Fed funds rate unchanged at 3.50%-3.75%.

Despite this, gold is poised to end the month with gains of over 9%, trading at $4,432 after hitting a daily high of $4,472.

The US and Iran's exchange of strikes in the Middle East also pushed energy prices higher, with West Texas Intermediate (WTI) rising 2.50% to $85.62, which may further increase inflation risks and support gold.