Gold Slips as Fed Hawkishness and Mideast Tensions Lift Dollar
Gold prices declined to around $4,365 in early Asian trading on Monday as Middle East tensions and hawkish Federal Reserve messaging kept US yields and the dollar supported.
The risk of oil-driven inflation added pressure on bullion, while the Fed's rate hike last week to a 3.75%-4.0% range and indication of further increases weighed on gold.
Kansas City Fed President Jeffrey Schmid backed the move, citing data that point to inflation above 3%, while Minneapolis Fed President Neel Kashkari said inflation remains elevated across multiple sectors rather than being confined to energy.
Despite the immediate pressure, market volatility is expected to increase due to the clash between tight monetary policy and severe geopolitical risks, providing opportunities for traders to exploit this environment through long straddles.