Gold prices fell sharply Tuesday as Federal Reserve rate-hike odds surged to 88% following last week's hawkish hold, strengthening the dollar and raising real yields. Spot gold dropped to $4,091 early in the session before recovering slightly to $4,134.56, down $57.13 on the day, as traders unwound long positions built on expectations of rate cuts. The metal faces additional pressure ahead of Thursday's PCE inflation report, which could reinforce or challenge the Fed's tightening bias.
The repricing from 61% to 88% rate-hike probability in five trading days has accelerated selling as funds exit gold positions. Chicago Fed President Austan Goolsbee reinforced the committee's hawkish stance Tuesday, citing persistent inflation concerns and a stable labor market that allows policymakers to maintain their tightening focus. Technical support levels at $4,203.24 and $4,160.91 are key targets for traders monitoring further downside risk.
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