Forex
Gold Faces Rate-Hike Risk as Jackson Hole and Inflation Take Focus
The US-Iran conflict has taken center stage at the Jackson Hole symposium as investors await remarks from Federal Reserve Chair Kevin Warsh for clues on the path of US interest rates.
Recent data have complicated the outlook for monetary easing, with the personal consumption expenditures price index rising 3.7% in the year through July, adding to bets that the central bank could hike rates this year.
The market is pricing a 34% chance of a rate hike in September and a 74% probability of a hike by December, according to the CME FedWatch tool.
Hence, gold faces a rate-hike risk as higher interest rates tend to weigh on the non-yielding asset, making it less attractive compared with interest-bearing investments.