Gold prices opened Monday under renewed selling pressure as market expectations for Federal Reserve interest rate increases intensified following Friday’s robust US jobs report. The precious metal is struggling to find support as traders price in a more aggressive Fed tightening cycle, diminishing the appeal of non-yielding assets like gold.
Adding to bearish momentum, oil-driven inflation concerns are mounting amid escalating geopolitical tensions between the United States and Iran. Higher energy costs typically fuel broader inflationary pressures, which ordinarily support gold as an inflation hedge, but aggressive Fed policy expectations are currently overwhelming this traditional dynamic.
The stronger-than-expected employment data has significantly reinforced the case for continued Fed rate hikes, pushing real yields higher and making dollar-denominated gold less attractive to holders of other currencies. Traders and brokers are closely monitoring how sustained energy price increases might influence the Fed’s policy trajectory in coming meetings.
FXnCO Insight
Gold remains vulnerable to further downside as long as Fed hawkishness dominates sentiment, with key technical support levels becoming critical watch points for short-term positioning.
Source: FXStreet