Gold Below $4300, Fed 90% Sure to Raise Rates as Oil Jumps

AI desk brief

Gold slipped below the key $4,300/oz level on Monday, falling as much as 2.4% to $4,279 and hitting a more than five-week low as markets priced a 90% chance of a Fed rate hike this Wednesday, up from 33% a month ago. The move came alongside a jump in crude toward a year-to-date high, a rise in the dollar to a near two-week high, and 10-year Treasury yields steadying near 4.97%, all of which pressured bullion and briefly dragged silver below $63/oz.

BullionVault cites MKS Pamp’s Nicky Shiels as saying the market is pricing roughly 50bp of hikes over Oct/Dec and close to 100bp over the next year, which she called stretched. Mohamed El-Erian said this week’s Fed meeting is unusually tricky because the bigger issue is the sudden rise in rate expectations and bond yields, while Middle East supply disruptions kept oil elevated and added to inflation fears.