Gold Under Bearish Pressure Ahead of Fed Meeting

This week, gold struggled to shake off bearish pressure as US Treasury bond yields climbed higher. Investors are gearing up for the Federal Reserve's critical policy meeting, which could trigger the next directional action in the precious metal.

Gold began the week under bearish pressure and closed Monday in negative territory due to rising crude oil prices and expectations of a Fed interest rate hike in September. The US Treasury Department announced that it will buy up to $6 billion in 10- to 20-year Treasury bonds, causing the 10-year US T-bond yield to reach its highest level since November 2023.

The Producer Price Index (PPI) rose by 5.4% on a yearly basis in August, above market expectations of 5.3%. Meanwhile, crude oil prices surged higher, with the barrel of West Texas Intermediate (WTI) rising above $100 for the first time since late May.

The CME FedWatch Tool's probability of a 25 basis points increase in interest rates in September advanced to 70%, while the 10-year US T-bond yield extended its rally toward 5%. This boosted the USD and dragged XAU/USD back below $4,400.