Gold Slides Below $4,120 as Rate-Hike Bets Shift
Gold extended its pullback from a two-week high, falling as much as 1.2% to below $4,120 an ounce, as hawkish Fed expectations and renewed shipping risks around the Strait of Hormuz weighed on sentiment.
Gold extended its pullback from a two-week high on Tuesday, falling as much as 1.2% to below $4,120 an ounce, as investors reassessed the outlook for US interest rates and monitored renewed shipping risks around the Strait of Hormuz. Spot gold was down 0.7% to $4,135.13 by late morning in London, while silver declined 2% to $60.80 an ounce.
The Federal Reserve's rate path remains the dominant driver for gold, since higher borrowing costs increase the opportunity cost of holding non-yielding bullion. The metal had weakened after the Fed's June meeting, when new Fed Chair Kevin Warsh sounded more hawkish than markets expected, although weaker-than-expected economic data had recently fueled speculation of a potential pause. The shift in rate-hike bets, combined with geopolitical tensions in the Middle East, has created a mixed backdrop for precious metals. For the latest gold prices, traders can check NowPrice's real-time quotes.
Looking ahead, market participants will focus on upcoming US economic data, including inflation reports and employment figures, which could influence the Fed's next move. Any signs of persistent inflation may reinforce hawkish expectations, while a slowdown could revive rate-cut bets. Additionally, developments in the Strait of Hormuz and broader geopolitical risks will remain in focus, as disruptions to shipping could impact risk sentiment and safe-haven demand for gold.