FX.co ★ Gold Holds Decline on Rate Hike Bets

Gold traded below $4,300 an ounce on Tuesday, hovering near a five-week low, as surging oil prices reinforced expectations of a US Federal Reserve interest rate hike this week. Crude extended its rally with Saudi Arabia’s East–West pipeline still offline, while Ukraine challenged President Trump’s assertion that it had already reached a deal with Russia to halt strikes on energy infrastructure.

The latest jump in energy costs intensified inflation worries and heightened pressure on the Fed to tighten policy, with futures markets currently assigning about a 92% probability to a 25-basis-point rate increase on Wednesday. At the same time, the yield on the US 10-year Treasury note climbed toward 5% amid mounting inflation and fiscal concerns, further weighing on non-interest-bearing bullion.

Beyond the US, the Bank of Japan is also widely expected to lift interest rates on Friday, as persistently high energy prices and ongoing tensions in the Middle East continue to cloud the global inflation outlook.