Gold Tumbles to $4,400 as Rate-Hike Odds Firm Ahead of Fed Decision
Gold prices plummeted to $4,400 an ounce on Tuesday as inflation pressure and odds of a Federal Reserve rate hike intensified. This drop comes despite a weakening dollar, which typically supports gold.
The rise in rate-hike expectations has become a dominant narrative in pricing bullion, with markets now favoring a 60% chance of a quarter-point move to lift the federal funds rate to 3.75-4.00%. The shift in odds was swift, from a 45% chance just a month ago.
The jobs report on Friday showed nonfarm payrolls up 162,000, nearly triple the forecasted 56,000, while the unemployment rate remained steady at 4.1%. This data reinforced the inflation narrative, pushing oil prices above $93 a barrel and further fueling expectations of a Fed rate hike.
Gold's unusual behavior this week underscores the dominant influence of rate-path narratives on bullion pricing. Even with a softer dollar, gold fell alongside it, underscoring how markets are prioritizing the outlook for interest rates over other factors.