Gold Prices Slip Below $4,300 as Stronger Dollar and Fed Rate Hike Expectations Weigh
Gold prices edged lower on Tuesday, remaining under the key $4,300 per troy ounce level after dropping more than 1% in the previous session. A stronger U.S. dollar and elevated Treasury yields continued to pressure the precious metal ahead of the Federal Reserve’s upcoming monetary policy decision.
Rising oil prices, higher bond yields, and a firmer dollar added to the bearish sentiment surrounding gold, although long-term investor demand continued to provide underlying support.
As of 2:16 p.m. WIB, spot gold (XAU/USD) fell 0.2% to $4,290.39 per ounce, while Gold Futures declined 0.5% to $4,330.57. Silver (XAG/USD) slipped 0.2% to $63.12 per ounce, while platinum (XPT/USD) gained 0.2% to $1,769.49. The U.S. Dollar Index (DXY) rose 0.2% to 99.63.
Oil Supply Disruptions Boost Fed Rate Hike Expectations
Gold remained under pressure after touching its lowest level in five weeks on Monday, with spot prices now trading below $4,300 as investors reassess the impact of rising energy costs, higher bond yields, and a stronger dollar on the Federal Reserve’s policy outlook.
Markets are currently pricing in a roughly 92% probability that the Fed will raise interest rates this week, as surging energy costs increase the risk of persistent inflation.
Higher interest rates typically weigh on gold because the non-yielding asset becomes less attractive compared with interest-bearing investments when borrowing costs rise.
Oil prices moved higher after Saudi Arabia shut down its East-West pipeline following attacks reported last week. The disruption has put millions of barrels per day at risk, as the pipeline had previously transported crude oil while bypassing the volatile Strait of Hormuz, a critical route for global energy supplies.
Saudi Arabia has not yet indicated how long the closure will remain in place or how quickly alternative shipments through the Strait of Hormuz can offset the lost flow.
Inflation concerns have also pushed U.S. Treasury yields higher. The benchmark 10-year Treasury yield briefly touched 5% on Monday for the first time in nearly three years, reflecting investor concerns over inflation as well as increasing government and corporate borrowing requirements.
Gold has now fallen more than 3% in September after trading above $4,600 per ounce in late August, as traders repeatedly adjusted expectations for future Fed policy.
Long-Term Demand Continues to Support Gold Outlook
Despite near-term weakness, investors continue to expect gold prices to recover over time as the metal reasserts its role as a portfolio hedge against economic uncertainty and inflation.
OCBC recently raised its precious metals forecasts, citing a stronger starting price base, growing investment participation, and supportive structural demand trends.
Chez Anbu, Head of Wealth Advisory at OCBC, said gold’s strong rebound in August reversed the weaker sentiment seen earlier in the year as macroeconomic conditions became increasingly favorable for the metal.
OCBC now forecasts gold prices to reach $4,600 per ounce by December 2026, while its silver target stands at $69.70 per ounce.
Although gold remains under pressure in the short term, prices continue to trade well above the $4,000 per ounce floor established during the previous correction. Rising investment participation and resilient structural demand are expected to support the broader long-term outlook for precious metals.
