Oil Surge Fuels 77% Chance of Fed Rate Hike, Weighing on Gold

A recent surge in oil prices has lifted expectations of a Federal Reserve interest rate hike in September to 77%, putting pressure on gold as investors anticipate tighter monetary policy.

The price of Brent-linked crude rose by over 1.5% to a six-week high following new US strikes on Iran and Houthi attacks on Red Sea oil tankers, increasing inflation expectations and pushing two-year US Treasury yields to a 17-month high.

Gold prices fell by 0.6% to $4,103.39 per ounce, retreating from the two-week high of $4,165.87, as higher real yields raised the opportunity cost of holding non-yielding bullion.