Gold Holds $4,400 Amid Fed Rate Hike Fears

Spot gold traded at $4,400.32 per ounce on Tuesday. The price was essentially flat from the previous session. Investors are in a wait-and-see mode ahead of key US economic data. The Federal Reserve meets next week, and rate decisions will drive the metal's direction.

In the prior session, gold rose nearly 1% to end a three-day losing streak. December futures settled up $21.70 at $4,460.70. Spot prices gained $42.84, or 0.98%, to close at $4,398.83. The metal has oscillated around the $4,400 level for several weeks. It rebounded from near $4,000 in July.

Yields and Oil Prices Press Gold

The US Treasury expanded its bond buyback program to $6 billion. This fell short of market expectations. The 10-year Treasury yield rose, reducing the appeal of non-interest-bearing gold. The dollar index also recovered some losses. Brent crude broke above $100 per barrel for the first time since July.

Iran warned of escalating conflict if US attacks continue. Disruptions to Middle East energy supplies could amplify inflation. This creates a mixed signal for gold. Higher energy prices boost demand for gold as a hedge. However, they also justify Fed rate hikes, which hurt bullion. The market currently weighs the rate hike risk more heavily.

Inflation Data Drives Fed Expectations

Investors await the US Producer Price Index and Consumer Price Index releases. These reports are the final clues before the Fed meeting on the 14th and 15th. Swap market traders price a 65% probability of a rate hike. Estimates range from 61% to 65% across surveys. This follows a stronger-than-expected August employment report.

The US economy added 162,000 jobs in August, exceeding forecasts. If PPI and CPI data come in high, rate-hike bets will solidify. This would exert downward pressure on gold. Conversely, cooling inflation would revive the rate-pause scenario. This would give gold room to rise. Ole Hansen of Saxo Bank noted that traders are cautious. He expects no fresh catalysts until the data releases.

Technical Levels Define Price Range

Spot gold faces initial resistance at $4,422 per ounce. Higher levels sit at $4,465 and $4,564. On the downside, first support is at $4,365. Further support levels are at $4,305 and $4,263. The 45-day moving average is near $4,320. Silver was flat at $67.29 per ounce. Platinum and palladium edged higher.

The Bloomberg Dollar Spot Index slipped 0.1%. According to Gold (Google News), the market is focused on the upcoming data. The interplay between inflation, yields, and oil prices remains the primary driver. Gold’s path depends on how the Fed responds to these economic signals. Traders are positioning for volatility in the coming days.