Fed Outlook and Oil Prices Weigh on Gold Steadiness
Gold prices steadied on Friday after a sharp drop of nearly 2% in the previous day, as investors weighed the implications of rising oil prices and potential interest rate hikes by the Federal Reserve. The FedWatch Tool indicates that markets now see an 78% chance of a rate hike in September, with the July 28-29 meeting expected to keep rates unchanged.
Oil prices surged 6% on Thursday, briefly reaching above $92.00, and currently hover around $88.50. The US military has completed its 13th consecutive night of strikes on Iran, raising concerns about a prolonged supply disruption and keeping oil prices elevated. Analysts at ING note that gold has struggled to attract meaningful safe-haven demand since the conflict began.
The near-term outlook for gold remains tilted towards the downside, but the metal continues to hold above the psychological $4,000 mark, leaving XAU/USD range-bound between $4,000 and $4,200 for a fifth consecutive week. The US economic docket awaits preliminary S&P Global Purchasing Managers Index (PMI) data during American trading hours.