Spot gold declines 0.2% as surging oil prices and hawkish Fed signals lift Treasury yields and the dollar, pressuring the metal.
Spot gold fell 0.2% to a two-week low on Tuesday, extending a 3% drop the prior session, its steepest daily decline in over a month. The slide reflects rising bets on Federal Reserve rate hikes as oil prices surge, stoking inflation fears and pushing Treasury yields and the dollar higher.
Oil futures climbed 9% in the previous session to their highest level since mid-June, while Fed Governor Waller’s hawkish remarks lifted September rate hike odds by over 20 percentage points in a week. The Middle East conflict, typically a catalyst for safe-haven demand, is instead weighing on gold due to its inflationary implications.
Markets now await this week’s CPI and PPI data, along with Fed testimony, to gauge whether the repricing of rate expectations will persist. Gold remains sensitive to both inflation readings and further escalation in the Gulf region.