Gold Falls as Hawkish Fed Bets and Iran Tensions Boost USD
Gold prices declined on Tuesday as market bets for an interest rate hike by the US Federal Reserve (Fed) and rising tensions between the US and Iran lifted the value of the US Dollar. Fed Chair Kevin Warsh's hawkish comments at the Jackson Hole Symposium last Friday contributed to a 65% chance of a rate hike, according to CME Group's FedWatch Tool.
The escalating conflict in the Middle East has increased fears of persistent inflation, which also supports interest rate hike bets. US forces struck two rocket launchers on Iran's Larak Island on Sunday, prompting an Iranian counterattack on American air bases in Jordan and a warning from President Donald Trump that further military action remained possible.
Traders are waiting for important US macro data releases this week, including the US ISM Manufacturing PMI and JOLTS Job Openings today, before making any directional bets. The closely watched Nonfarm Payrolls (NFP) report on Friday will likely remain a key focus of attention.