Hawkish Fed Pushes Gold Below $4,000

The Federal Reserve's next move is a key factor in determining the price of gold. A hawkish tilt from the Fed, with a roughly 38% chance of a quarter-point increase, could push gold below $4,000. The US dollar has already strengthened, making bullion more expensive for buyers using other currencies.

Rising Treasury yields are also improving the relative appeal of bonds over gold, which pays no interest. This headwind for non-yielding gold is a concern for investors, particularly if they anticipate several Fed hikes in the future.

Deutsche Bank analyst Michael Hsueh projected that resilient economic data and changing Fed expectations have become more important for gold than oil. He also warned that a risk case of pricing 3-4 Fed hikes may bring gold to $3,800/oz.