Expectations of Fed Rate Hike Rise as International Gold Prices Weaken Sharply

⑴ As this week’s Federal Reserve interest rate meeting approaches, stronger-than-expected U.S. inflation data combined with rising oil prices have heightened market expectations for a rate hike. On Monday, spot gold fell 1.2% to $4,285.35 per ounce, while U.S. gold futures dropped 1.6% to $4,326.80 per ounce. ⑵ The U.S. dollar rose to a one-week high, putting pressure on dollar-denominated precious metals; CME Tool shows the probability of a rate hike at this meeting has risen to 88%, with institutions such as Goldman Sachs and HSBC predicting the Federal Reserve will raise rates by 25 basis points. ⑶ U.S. CPI data for August came in strong, with core inflation posting the largest increase since April, reinforcing the Federal Reserve’s hawkish stance; the Bank of Japan is also expected to implement a rate hike this week. ⑷ Geopolitical tensions continue to disrupt the global energy market, with a sudden conflict attack in the Gulf region intensifying concerns over crude oil supply. Combined with volatility related to Saudi Arabia’s key oil pipeline and delayed Middle East diplomatic negotiations, international oil prices jumped nearly 3% in a single day. ⑸ Non-agricultural precious metals declined in tandem, with spot silver down 2.5%; platinum down 1.8%; and palladium down 1.9%.