Gold Stabilizes Near $4300 as Fed Rate Hike Bets Rise to 92%

Gold prices have stabilized near $4300 an ounce after a decline, as increased turmoil in oil flows from the Middle East has strengthened expectations that the Federal Reserve could raise interest rates as early as this week.

The precious metal was trading at around $4308.92 an ounce on Monday morning in Singapore, after falling by more than 1% in the previous session to its lowest level in five weeks.

The prospects of high energy prices fueling inflation have increased pressure on the Federal Reserve to implement its first interest rate hike in three years, with traders pricing in a 92% probability of this occurring when the central bank meets in the coming days.

Gerald Gane, Chief Investment Officer at Reed Capital Partners Pte Ltd, stated that gold is likely to face opposing pressures in the period before and immediately after the Federal Reserve meeting. The precious metal may be pressured by rising yields and growing market expectations that Kevin Warsh may initiate a rate hike cycle, even if only briefly, to curb rising price pressures.

The yield on 10-year Treasury bonds touched 5% briefly for the first time in nearly three years on Monday amid concerns about inflation and escalating government borrowing needs and corporate debt, another headwind for the non-yielding precious metal.