Gold Gives Back Gains as Oil Rebounds, Dollar Strengthens
Gold's gains on Monday were trimmed as oil and dollar prices rebounded before the Federal Reserve's interest rate decision this week. The precious metal had opened the day with a bullish gap, trading near $4,083 after briefly moving above $4,100.
The early bid in gold was supported by expectations of a pause in hostilities between the United States and Iran, but that narrative weakened as geopolitical headlines shifted and energy markets reversed higher. West Texas Intermediate crude rebounded from an intraday low of $81.28 to trade near $83 per barrel, still down more than 6% on the day.
The Fed's decision on Wednesday is the central event on the calendar, followed by the release of US Personal Consumption Expenditures inflation data on Thursday. Market participants assign a 33% probability to a rate hike, based on the CME FedWatch Tool, with an implied likelihood of a rate increase in September near 79%. This prospect continues to weigh on non-yielding assets such as gold, while the US Dollar remains underpinned by expectations of a hawkish Fed stance and ongoing tensions in the Middle East.