Gold Slips Below $4,350 as Fed Hike Odds Rise to 86%
The yellow metal trades near $4,340. Higher US inflation data pushes the probability of a September rate hike to nearly 86%.
Gold fell to approximately $4,340 in early Asian trading on Monday. The decline follows the release of August US inflation data that exceeded market expectations. This data increases the likelihood that the Federal Reserve will raise interest rates this week.
The core Consumer Price Index rose 0.3% month-over-month in August. This figure was higher than the 0.2% consensus forecast. The stronger inflation reading has intensified pressure on the central bank to act.
Inflation Data Drives Rate Hike Expectations
Traders now price in an 86.2% chance of a rate hike by the September meeting. This probability increased from 72% before the latest Producer Price Index data. Higher interest rates typically reduce demand for gold, which does not offer a yield.
According to GN markets/policy (en-US), this shift in monetary policy expectations is the primary driver of current price action. The market awaits the Fed decision on Wednesday for further direction.
Market Sentiment Remains Divided on Policy Path
Analysts note that not all Federal Open Market Committee members support an immediate hike. Some policymakers may argue for patience given the recent dip in annual core inflation. This internal disagreement adds uncertainty to the Wednesday decision.
TD Securities observes that gold has maintained support in its higher range. The metal has held firm despite rising energy costs and increased hike probabilities. This resilience suggests underlying demand remains strong despite macroeconomic headwinds.
Technical Levels Define Near-Term Trading Range
XAU/USD consolidates just above the 100-day moving average at $4,332.30. The price remains capped below the 20-day simple moving average middle band. The Relative Strength Index sits at 47.11, indicating balanced momentum.
Initial resistance is located at $4,460. A break above this level could open the path to $4,680. Immediate support is found at $4,330. A deeper decline would test the lower Bollinger band at $4,238.07.
