FX.co ★ Gold Holds Decline on Stronger Dollar, Yields

Gold traded below $4,300 an ounce on Thursday, extending the steep decline from the previous session as a stronger dollar and surging US Treasury yields weighed on the metal. The moves followed stronger-than-expected US private-sector data, which intensified inflation concerns and bolstered expectations of additional interest rate hikes by the Federal Reserve. Several Fed officials also reaffirmed their support for last week’s rate increase and cautioned that inflation risks remain elevated. Markets are now pricing in roughly a 70% probability of another Fed rate hike in October, up from about 55% the day before. At the same time, oil prices rebounded after Iranian President Masoud Pezeshkian adopted a hard line, stating that Tehran would not permit freedom of navigation through the Strait of Hormuz as long as sanctions and a US blockade remain in effect. Rising oil prices are adding to inflationary pressures, further reinforcing expectations for a more hawkish interest-rate outlook.