Gold slipped 0.1% as Brent crude breached $90 on Middle East tensions, while Fed officials signaled rates may need to rise, raising gold's opportunity cost.
Alpha Score of 61 reflects moderate overall profile with moderate momentum, weak value, strong quality, moderate sentiment.
Gold prices fell 0.1% to $4,014.53 an ounce Monday. Brent crude broke past $90 a barrel on escalating Middle East conflict, and a growing number of Federal Reserve policymakers signaled interest rates may need to rise, traders said.
“The weekend escalations increase the risk of a potential full-scale offensive by both sides, which potentially threatens gold prices as the opportunity cost for holding the metal gets higher if this ongoing stagflation fear starts to take hold,” said Kelvin Wong, a senior market analyst at OANDA.
Gold is typically seen as an inflation hedge. High interest rates, however, increase the opportunity cost of holding the non-yielding asset. Elevated oil prices can stoke inflation fears and bets of higher-for-longer rates.
Cleveland Fed President Beth Hammack added her voice to a growing chorus of policymakers arguing interest rates may need to rise to beat back persistent inflation. Traders are now pricing an 82% chance of a December rate hike, up from 73% last week, according to the CME FedWatch Tool.
CME Group, which operates the FedWatch tool, carries an Alpha Score of 50 on AlphaScala, reflecting neutral sentiment.
“On the longer term, I’m more cautious on gold and looking at the key $3,886 level, which if taken out on the downside, could potentially unleash further weakness towards $3,500,” Wong added.
Spot silver gained 1.9% to $56.95. Platinum rose 0.5% to $1,599.97, while palladium eased 0.2% to $1,244.50.
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