Finance · updated 2h ago · 2 min read
Gold Slides as Oil Rises After Houthis Attack Saudi Energy Facilities, Fed-Hike Bets Grow
Gold fell as oil rose, fueling inflation fears and boosting bets on September Fed hike Spot gold around $4,385-$4,400 per ounce, with futures down about 1%
12 outlets, one story, no spin found.
7 of 8 outlets skipped it: indexBox ties trade to $4,422-$4,465 resistance and $4,365 support.
12outlets compared
Gold slides on oil, yields
Gold prices inched lower on Tuesday as rising oil prices fueled inflation concerns and boosted expectations for a Federal Reserve rate hike in September, with investors awaiting U.S. inflation data for further clues on monetary policy outlook.
“Spot gold fell 0.4% to $4,385.09 per ounce”
Spot gold fell 0.4% to $4,385.09 per ounce by 02:22 p.m. EDT (1822 GMT), while U.S. gold futures for December delivery dropped 1% to settle at $4,430.10.
Oil prices touched multi-week highs after Yemen's Tehran-backed Houthis attacked Saudi energy facilities and Tehran threatened the United States with "economic warfare," pushing Brent crude to $99.46.
Traders were pricing in about a 60% chance of a rate hike at the central bank's policy meeting, according to the CME FedWatch Tool, up from about 50% before the data.
Daniel Pavilonis, senior market strategist at Stone X, said gold is "range-bound because it is capped by a higher probability of raising interest rates."
Inflation data in focus
Investors remained cautious ahead of U.S. producer price index data on Thursday and consumer price index data on Friday, as oil prices reignited inflation fears and kept rate-hike bets elevated.
Nikos Tzabouras, a senior market analyst at Jefferies-owned Tradu.com, said, "Higher oil prices stoke inflation risks and expectations for Fed rate hikes, putting the precious metal under pressure," as spot gold fell 0.1% to $4,400.66 per ounce by 1148 GMT.
The Reuters market framing echoed that the market continues to absorb the stronger-than-expected U.S. jobs report and await upcoming CPI and PPI data, with higher oil prices stoking inflation concerns and supporting expectations for a September rate hike.
In the metals complex, silver edged 0.3% higher to $66.34 per ounce, platinum rose 1.1% to $1,843.99, and palladium slid 2.5% to $1,354.15.
Peter Grant, vice president and senior metals strategist at Zaner Metals, said the market is "awaiting CPI and PPI data" to determine whether price pressures are sufficient to back the expectation of a September move.
Fed odds, technical levels
With the Fed-hike trade still alive, markets were also anchored to the timing of the Federal Reserve's September 15-16 policy gathering and the odds implied by futures.
“Markets are pricing roughly a 60% probability of a September rate hike”
Kitco NewsWire said markets are pricing roughly a 60% probability of a September rate hike after last week's 162,000 payroll gain, and it pointed to Thursday's Producer Price Index and Friday's Consumer Price Index for confirmation.
The same report described spot gold as trying to hold above the $4,365 support level after repeated failures below the $4,422 to $4,465 resistance zone, while silver was compressing below $67.21 as participants waited for the next macro break.
In a separate market snapshot, Boursa.info said gold is "trapped in a narrow range due to the higher likelihood of rate hikes, which continues to dampen momentum in the market."
Boursa.info also tied the move to oil and Fed expectations, noting Brent at $99.46 after Houthi attacks backed by Iran on Saudi energy facilities and Tehran’s threat of a "economic war" against the United States.