Gold Extends Losses as Hawkish Fed Signals Point to Higher Rates

Gold prices eased to around $4,330 an ounce on Tuesday, extending losses from the previous session as hawkish comments from Federal Reserve officials reinforced expectations that US interest rates will remain higher for longer. The US central bank raised its policy rate by 25 basis points last week, marking its first such move in three years, while Chair Kevin Warsh signaled that further rate increases could follow in the months ahead. Other Fed officials, including St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee, continued to emphasize the need for additional tightening to curb inflation fueled by strong demand and rising energy prices. Markets are now pricing in a roughly 90% probability of another rate hike in December, according to the CME FedWatch Tool. Elsewhere, oil prices fell for a fifth consecutive session following reports that Iran could reopen the Strait of Hormuz within seven days if the US takes initial steps to ease military pressure.

Gold fell toward $4,300 an ounce on Tuesday, extending losses from the previous session as hawkish comments from Federal Reserve officials strengthened expectations for further US interest rate hikes. On Monday, Chicago Fed President Austan Goolsbee said the central bank must account for persistent supply shocks, while St. Louis Fed President Alberto Musalem said additional increases may be needed to bring inflation toward the Fed’s target. Meanwhile, falling oil prices offered some support for gold amid increased diplomatic efforts to end the Middle East conflict and signs of continued energy flows from the region. President Trump is due to address the UN General Assembly in New York later today and may meet Iranian President Pezeshkian on the sidelines. Gold also remains supported by longer-term factors, including continued central bank buying, geopolitical uncertainty and concerns over fiscal sustainability and currency debasement.

Gold prices climbed above $4,350 an ounce on Tuesday, recovering from the previous session’s losses as falling oil prices eased inflation concerns and expectations for further rate hikes. Oil prices declined for four straight sessions amid increased diplomatic efforts to end the Middle East conflict and signs of continued energy flows from the region. President Trump is scheduled to address the UN General Assembly in New York later today and may meet with Iranian President Pezeshkian on the sidelines. Lower oil prices help ease inflationary pressures, reducing expectations for additional rate hikes by the Federal Reserve. Still, hawkish comments from Fed officials reinforced expectations for a tighter US interest-rate outlook following last week’s first rate hike in three years. Gold also continues to benefit from strong long-term fundamentals, including sustained central bank purchases, elevated geopolitical uncertainty, and concerns over fiscal sustainability and currency debasement.