Gold slips as Fed officials signal rate hikes
GLD•Gold eases on hawkish Fed signals
Gold prices eased on Tuesday as hawkish signals from U.S. Federal Reserve policymakers reinforced market expectations that interest rates will stay higher for longer.
Spot gold XAU= was down 0.5% at $4,321.74 per ounce by 1213 GMT. U.S. gold futures GCcv1 fell 0.6% to $4,359.20.
"Overnight, the Fed's Musalem said more rate hikes are likely needed to cool prices, though he is known to lean hawkish," said Jamie Dutta, a market analyst at trading platform Nemo.money, adding: "We remain stuck in a near-term range between $4,300 and $4,400 for gold".
"Tighter monetary policy is a headwind for gold, which means more than one Fed rate hike by year end will likely hurt the precious metal," Dutta said.
Traders price in more tightening while metals move mixed
The U.S. central bank raised its policy rate by 25 basis points last week and Chair Kevin Warsh flagged more hikes to come in the months ahead.
Fed policymakers such as St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee continued to signal the need for further rate hikes to lower inflation stemming from strong demand and rising energy prices.
Traders see a 90% chance of a rate hike in December, compared with 80% last week, according to the CME FedWatch Tool.
Bullion is traditionally viewed as a hedge against inflation and geopolitical risks, but its appeal tends to wane in a high-interest-rate environment as investors favour yield-bearing assets.
In the Middle East, Houthi fighters pushed to seize strategic heights in Yemen to cut off the Red Sea coast from remaining areas held by Saudi-backed forces, after a report that U.S. President Donald Trump had called off American strikes on the Iran-backed group at the last minute.
