XAU/USD stabilizes after a 2% drop as traders weigh Fed rate hike odds and Middle East tensions amid elevated oil prices.
Gold prices steadied around $4,060 on Friday after sliding nearly 2% the prior session, as traders assessed Federal Reserve policy and geopolitical risks. The metal found modest support from a pullback in the US dollar and Treasury yields, though gains remained limited by expectations of tighter monetary policy and persistent Middle East conflict.
Markets now price a 78% chance of a Fed rate hike in September, according to the CME FedWatch Tool, while the central bank is expected to hold rates steady at its late-July meeting. New US tariffs on 60 trading partners and escalating tensions in the Middle East, including threats to key oil shipping routes, have fueled inflation concerns and kept oil prices elevated.
The precious metal typically moves inversely to the dollar and yields, but its upside remains constrained by the hawkish Fed narrative and slim prospects for near-term de-escalation in the region.