XAU/USD falls to $4,325 as traders price in a 43% chance of a December Fed rate increase amid geopolitical risks.
Gold prices retreated to $4,325 in early Asian trading Tuesday, extending losses as expectations of a Federal Reserve rate hike weighed on demand. The precious metal, typically a safe-haven asset, struggled near its lowest level since March 24 amid mixed geopolitical signals and stronger-than-expected US jobs data.
Traders now assign a 43% probability to a quarter-point Fed rate hike in December, up sharply from 14% a month ago, according to the CME FedWatch tool. Gold’s appeal dims in high-rate environments as it yields no interest. Meanwhile, Iran and Israel agreed to de-escalate tensions, though Israel’s military warned of harsher retaliation if attacks persist.
Markets await Wednesday’s US Consumer Price Index and Thursday’s Producer Price Index for further Fed policy clues. Rising inflation concerns and elevated rate expectations continue to pressure non-yielding assets like gold.