Gold Set for Fourth Weekly Loss as Fed Rate Hike Bets Strengthen Dollar

Gold prices are tracking toward a fourth straight weekly loss, according to reports, as the U.S. dollar appreciates on the back of expectations for Federal Reserve interest rate hikes. The announcement indicated that investors are pricing in the likelihood of further monetary tightening by U.S. central bank officials. Underlying inflation pressures remain elevated despite some hopes for moderation, reinforcing market expectations that the Fed will maintain its hawkish stance.

Beyond the domestic monetary outlook, the precious metal is also contending with geopolitical uncertainty. Reports noted that the U.S.-Iran peace agreement faces renewed concerns following an incident in the Strait of Hormuz, introducing additional volatility into the equation.

From a broader market perspective, gold's weakness reflects the inverse relationship between bullion and real interest rates—rising rate expectations increase the opportunity cost of holding non-yielding assets like gold. A stronger dollar simultaneously makes gold more expensive for foreign buyers, further dampening demand. For traders, this environment signals that risk-on sentiment may be taking hold, with investors rotating away from safe-haven assets into yield-bearing alternatives. Geopolitical tensions, however, serve as a reminder that safe-haven demand could resurface quickly if risk sentiment deteriorates. Currency markets and inflation expectations remain key variables to monitor alongside Fed communications for determining gold's near-term direction.

Source: Markets-Economic Times