Gold has suddenly lost some of its shine after one of its strongest months of the year. Prices have fallen for four straight sessions as a stronger dollar, rising Treasury yields and expectations of tighter U.S. monetary policy weigh on the precious metal. Renewed conflict involving Iran is adding another complication by pushing oil prices higher and fueling inflation concerns.
Rate hike odds weigh on gold
Spot gold fell to around $4,327 per ounce, its lowest in more than three weeks, while futures slipped 0.5% to $4,373. The metal has lost roughly 6% this week after gaining about 10% in August.
Federal Reserve Chair Kevin Warsh added pressure with hawkish comments at Jackson Hole, suggesting monetary policy may stay restrictive for longer. Fed Governor Michael Barr reinforced those concerns, saying officials must be ready to tighten further if inflation remains stubborn.
Markets now see a 70% chance of a rate hike at the Fed’s September 15-16 meeting, according to CME’s FedWatch tool. Higher rates tend to hurt gold by making interest-paying assets more attractive. Bond and currency markets are adding pressure. Thirty-year U.S. Treasury yields climbed above 5.28%, while the U.S. Dollar Index rose 0.1% to 99.73.
A complicated gold outlook
Geopolitical tensions are creating an unusual problem for gold as new U.S. military operations against Iran send energy prices higher. Brent crude traded near $94 per barrel, while U.S. crude remained just below $90 as traders watched for possible disruption around the Strait of Hormuz.
Costlier oil could keep inflation elevated and give the Fed another reason to maintain restrictive monetary policy. Gold has also fallen below its closely watched 200-day moving average, adding a technical warning to the broader market pressure.
Attention now turns to Friday’s U.S. nonfarm payrolls report. Weaker employment figures could encourage bargain buying, while stronger job growth may push yields higher and extend gold’s four-session decline.
