Gold Steadies Near $4,333 as Fed Prepares to Hike Rates Amid Oil Price Surge
The price of gold steadied near $4,333 on Tuesday as investors awaited the Federal Reserve's policy meeting. The FedWatch tool showed a nearly 95% chance of a quarter-point interest rate hike at the conclusion of the meeting, which would take the fed funds rate to between 3.75%-4.00%. This was after turmoil in the Middle East pushed oil prices to new highs due to drone strikes on Saudi Arabia's East-West pipeline and an attack on a ship.
The dollar index rose by 0.36% on Tuesday, further pressuring gold lower. The US 10-year bond yield also broke above a 5% yield, reaching its highest level since July 2007. This has fueled concerns about inflation, which is currently holding at 3.4%. The Bank of Japan is expected to raise its benchmark rate on Friday, adding to the synchronized global tightening.
Gold futures slipped by $6.60 or 0.15% to settle near $4,333.40 on Tuesday, after falling $50 (1.14%) on Monday to its lowest price so far this month. The market appears to have largely priced in this week's main event: the Federal Reserve's two-day September policy meeting.