FX.co ★ Gold Pressured by Fed Rate Hike Expectations

Gold fell below $4,150 an ounce on Tuesday, erasing gains from the previous session as firm expectations of further Federal Reserve interest rate hikes outweighed optimism over ongoing US–Iran peace talks. Both Deutsche Bank and BofA Global Research have updated their outlooks to factor in a rate increase in September. Attention is now turning to this week’s PCE report, which includes the Fed’s preferred inflation gauge and is expected to provide fresh insight into underlying price pressures.

At the same time, Washington granted Iran a 60-day license to sell oil on international markets, strengthening expectations of a quicker recovery in global supply. Shipping activity through the Strait of Hormuz has also picked up, as producers such as Kuwait and the United Arab Emirates have secured alternative export routes, while Iran exported more than 30 million barrels over the past week.