Gold extends losses as Fed tightening risk lifts real yields and dollar

Gold prices have extended their losses this week as the fallout from the Federal Reserve's hawkish policy decision continues to push real yields and the US dollar higher. The precious metal has been under sustained pressure since the Fed surprised markets by projecting a rate hike this year, contrary to the consensus expectation of no change.

The core driver behind gold's decline is the sharp rise in real yields, which increase the opportunity cost of holding non-yielding assets like gold. Simultaneously, the US dollar has strengthened as markets repriced rate expectations. According to the latest pricing, the market now sees 42 basis points of tightening by year-end, with a 36% chance of a hike as early as July and a 72% probability of a move in September. For traders tracking these moves, NowPrice's real-time gold and dollar quotes provide the latest levels as the trend develops.

Looking ahead, the path for gold will depend on incoming economic data and financial market conditions. Fed officials have indicated that data will guide future policy, meaning key releases such as inflation and employment figures will be closely watched. If the data continues to support the hawkish narrative, gold could face further downside. Conversely, any signs of economic weakness might temper rate hike expectations and provide some relief for the metal.