Gold Struggles Near Seven-Week Low Amid Rate Hike Fears and Rising Oil Prices
Gold prices steadied on Tuesday but remained near a seven-week low due to concerns that the Federal Reserve may keep interest rates higher for longer. The precious metal hovered at $4,124.57 per ounce as of 0140 GMT, after hitting its lowest level since August 5 in the previous session.
US gold futures fell 0.3% to $4,156.70, while oil prices rose for a second successive session amid lingering concerns over Middle East supply disruptions.
Elevated oil prices can fuel inflation by increasing costs across the economy, potentially prompting central banks to raise interest rates to keep price pressures in check. Despite its reputation as an inflation hedge, gold tends to struggle in a high-rate environment as investors favour assets that generate returns.
Markets currently see a 70.3% probability of a Fed rate hike in October, according to the CME's FedWatch Tool. Investors are watching a series of US economic data due this week, including job openings, ADP employment, PCE figures, and nonfarm payrolls, for fresh signals on monetary policy.