Gold near nine-week low on prospects for rate hike by end-2026
Bullion nears US$4,110 an ounce, after falling 1.3% the day before to the lowest since early August
[MELBOURNE] Gold traded near a nine-week low as fresh tensions in the Strait of Hormuz heightened war-driven inflation concerns and investors weighed prospects for at least one more US rate hike in 2026.
Bullion was near US$4,110 an ounce, after falling 1.3 per cent the day before to the lowest since early August.
Teheran has stepped up attacks on tankers crossing the key waterway, while the White House is reportedly considering options for military strikes against Iranian targets ahead of midterm elections in November.
Gold is down around a fifth since the conflict erupted in late February as surging energy costs stoked inflation and prompted central banks to start tightening monetary policy, a headwind for the non-yielding precious metal.
While oil flows from the Middle East are estimated to have returned to near pre-conflict volumes, elevated risks have sent shipping costs to a record high. A storm in the Gulf of Mexico was further pressuring energy supplies.
Adding to bearish sentiment for gold, minutes from the last US Federal Reserve meeting showed that all 19 policymakers backed the September hike decision, and most expected another would be appropriate by end-2026.
Investors are now pricing in a roughly 20 per cent chance of a hike at the Fed’s next meeting in late October, but an 80 per cent probability in December.
This also added support to the greenback, with the Bloomberg Dollar Spot Index gauge of the currency trading near 2026’s peak. A stronger US dollar tends to make bullion more expensive for most buyers.
“The Fed minutes have kept gold under a stubborn ceiling, with policymakers still united in their inflation fight but divided over whether September’s hike was a precaution or the beginning of a tougher tightening campaign,” said Hebe Chen, senior market analyst at Vantage Global Prime.
Spot gold was little changed at US$4,109.86 an ounce at 7.32 am in Singapore. Silver was up 0.1 per cent at US$59.86, after falling 2.5 per cent in the previous session.
Platinum and palladium were flat. The Bloomberg dollar gauge was unchanged after rising 0.3 per cent the day before. BLOOMBERG
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