FX.co ★ Gold Under Pressure from Rate Hike Bets

Gold hovered near $4,400 an ounce on Tuesday, stabilizing after a decline in the previous session, as expectations of imminent interest rate hikes by major central banks weighed on the metal amid renewed inflation concerns driven by elevated oil prices. Markets are currently assigning roughly a 60% probability that the US Federal Reserve will implement a 25-basis-point rate increase next week following robust labor market data, while upcoming inflation readings are expected to provide further guidance on the policy outlook. The European Central Bank and the Bank of Japan are also widely anticipated to raise rates this month. At the same time, investors continued to track geopolitical developments in the Middle East, where renewed US-Iran hostilities have pushed oil prices higher. Despite these headwinds, gold may continue to find support from investment and hedging demand, with sustained central bank purchases and the so-called debasement trade—where investors seek protection against the erosion of fiat currency value—remaining key drivers for the precious metal.