Gold Stalls at $4,400 Amid Inflation Concerns and Rate Hike Bets
International gold prices are fluctuating around $4,400 per ounce as investors await key economic data and a Federal Reserve monetary policy meeting. Spot gold traded at $4,400.32 per ounce on the 10th, with December-delivery gold futures settling up 0.49% to $4,460.70. The precious metal has been oscillating around this level for several weeks after rebounding from near $4,000 per ounce in July.
Rising Treasury yields and Middle East-driven inflation concerns are capping near-term upside for gold, despite some long-term investors re-entering the market for portfolio hedging purposes. The US Treasury's expansion of its bond buyback program to as much as $6 billion has put upward pressure on the 10-year Treasury yield.
The current situation is further complicated by international oil prices, with Brent crude breaking above $100 per barrel for the first time since July due to escalating tensions in the Middle East. This development cuts both ways for gold, stimulating demand as an inflation hedge but also providing justification for the Fed to raise rates.
Investor attention is focused on this week's US Producer Price Index (PPI) and Consumer Price Index (CPI) releases, which will influence the rate trajectory ahead of the Fed's policy meeting scheduled for the 14th-15th. Swap market traders are pricing in a roughly 65% probability that the Fed will raise rates at its next meeting.