Rising Energy Costs Boost Rate-Hike Bets Amid Escalating Conflict
Gold prices held steady at around US$4,050 an ounce on Friday, July 24, as rising energy costs fueled expectations that the US Federal Reserve will raise interest rates. The conflict in the Middle East has pushed oil prices above US$100 a barrel for the first time since May.
The surge in energy costs is likely to keep inflation concerns high, making it more probable that the Fed will tighten monetary policy. Swap traders now see a 34% chance of a rate hike at the upcoming July 28-29 meeting, with at least one increase already priced in for September and a second possible before the end of 2026.
The increasing possibility of higher borrowing costs is a headwind for gold, which has largely hovered around US$4,000 since late June. This level is seen as key support by some traders, who note that gold is down roughly a quarter since US and Israel launched strikes on Iran in late February.