Gold Heads for 12% Monthly Loss on Hawkish Fed Rate Hike Bets
Gold is on track for a 12% monthly decline as traders price in multiple Federal Reserve rate hikes this year, with a 60% chance of a September increase, according to the CME FedWatch tool.
Gold prices are heading for a 12% monthly loss, pressured by expectations that the Federal Reserve will continue hiking interest rates this year. Despite ongoing geopolitical uncertainties, traders are focusing on the Fed's hawkish stance, with the CME FedWatch tool showing a more than 60% probability of a rate hike in September and three total increases priced in for 2026.
For gold and precious metals traders, the prospect of higher interest rates is a key headwind. Gold, as a non-yielding asset, tends to lose appeal when rates rise, as opportunity costs increase. A resilient US dollar and easing energy prices have further reduced demand for safe-haven assets. Analysts at MUFG noted that gold is likely to remain under pressure in the near term as these factors persist. Traders can monitor real-time gold price movements on NowPrice's live dashboard to track the impact of Fed expectations.
Looking ahead, the focus will be on upcoming US economic data, particularly inflation readings and employment figures, which could influence the Fed's pace of tightening. Any signs of slowing inflation might ease rate hike bets, potentially providing some relief for gold. However, as long as the Fed maintains a hawkish outlook, gold is likely to face continued headwinds. Traders should also watch for any shifts in geopolitical tensions that could reignite safe-haven demand.