Dollar Strength Weighs Down on Gold as Fed Hike Odds Rise to 66%
The US Dollar's stabilization and hawkish Federal Reserve expectations have weighed down on gold prices. As of writing, XAU/USD trades around $4,053.3, down 1.22% on the day after failing to sustain gains above $4,100.
Despite snapping a four-month losing streak, gold's upside is limited by elevated US Treasury yields and expectations of higher interest rates. The Fed left interest rates unchanged within the 3.50%-3.75% range on Wednesday, with three policymakers voting for an immediate rate hike.
The CME FedWatch Tool indicates that traders currently price in a 66% probability of a 25-basis-point rate hike in September. In the near term, gold prices are expected to remain range-bound as traders assess developments in the Middle East and the Fed's interest-rate outlook.