Gold Slips as Fed Rate-Hike Bets and Oil Rally Send Treasury Yields Soaring

Gold prices have taken a hit in early trading as expectations of a Federal Reserve rate hike and an oil-driven surge in Treasury yields weigh on the non-yielding metal. The recent pullback follows a period of consolidation, with investors reassessing their outlook for monetary policy and inflation.

The immediate catalyst for gold's decline is the sharp rise in U.S. Treasury yields, which increases the opportunity cost of holding bullion. This move was amplified by a rally in crude oil prices, stoking inflation concerns and reinforcing the case for the Fed to maintain a hawkish stance.

Market-implied probabilities for a rate hike at the next Federal Open Market Committee (FOMC) meeting have risen notably, according to CME FedWatch data. As of this week, traders are pricing in a roughly 40% chance of a 25-basis-point hike, up from 30% a month ago.