Spot gold held above $4,300 in Tuesday's European session as traders weighed rising Fed rate-hike bets against an Iranian offer to reopen the Strait of Hormuz. December gold futures traded around $4,357, with $4,400 now the key resistance level to watch.
Gold rebounded above $4,300 after touching an intraday low of $4,291 early in Tuesday's European session, with December futures holding near $4,357. On Yahoo Finance's tracker, the December contract opened at $4,382.50 per troy ounce on Tuesday, flat from Monday's close, before slipping to $4,368.40 in early trading.
Fed rate-hike bets rise, yields retreat
Expectations for a December Fed rate hike have climbed to 89% on the CME FedWatch Tool, as policymakers remain concerned that U.S. inflation is still too high. St. Louis Fed President Alberto Musalem said further rate hikes may be needed to bring inflation back to the Fed's target. That follows a rate increase earlier this month that was the Fed's first in three years, decided unanimously.
Higher rates typically raise the opportunity cost of holding gold. Yet the 10-year Treasury yield pulled back from its highest level since 2007, easing some of that pressure.
Iran's Hormuz offer moves oil and gold together
Iran offered to reopen the Strait of Hormuz within seven days if the U.S. eases its military blockade. WTI crude fell below $90 per barrel on the news, and gold's rebound above $4,300 followed the same headline. Markets are now watching Trump's meeting with Gulf Cooperation Council leaders later Tuesday, along with this week's Trump-Xi meeting, for signs of whether the standoff eases further.
Chinese demand keeps a floor under prices
Gold also draws support from China, where gold imports through August already topped 1,000 tons, surpassing the full-year 2025 total. Bannockburn Capital Markets' Darrell Fletcher cautioned on the risk of buying near record highs: According to Yahoo Finance: "Buying high to hope for short-term higher is a tough strategy."
Technically, $4,400 is the key resistance level, with a break above needed for further upside. On the downside, $4,280 is the nearest support; a break below could send gold toward $4,250 in the short term.
Sources: Investing.com, Yahoo Finance
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