Gold: Fed risk keeps bullion vulnerable – ING

ING strategists Warren Patterson and Ewa Manthey say Gold has slipped as higher Oil prices stoke inflation concerns and reinforce expectations of a potential Federal Reserve rate hike, lifting Treasury yields and the US Dollar. They note that while much hawkish risk is priced, Gold could stay vulnerable if policymakers signal higher-for-longer rates, though geopolitical and energy-related risks still underpin demand.

Higher-for-longer risk weighs on bullion

"Gold traded lower as a sharp rise in oil fuelled inflation concerns and strengthened expectations that the Federal Reserve could deliver its first rate hike since 2023 this week."

"Higher Treasury yields and a firmer US dollar added to the pressure, with investors reducing exposure ahead of Wednesday's decision."

"Much of the hawkish Fed risk appears to be priced in. However, gold could remain vulnerable if policymakers signal rates will stay higher for longer."

"Persistent geopolitical risks and concerns over the economic impact of elevated energy prices should continue to provide underlying support."