Gold Slips Below $4,300 as Fed Rate Hike Bets Intensify

Gold slid below the $4,300 mark on Monday and Tuesday, extending its September decline, as mounting expectations for a U.S. Federal Reserve rate hike this week weighed heavily on the metal. Spot gold was trading around $4,284–$4,292 an ounce in Asian hours on Wednesday, according to multiple sources, after briefly testing $4,253—a drop of more than 3% for the month and nearly 10% from August highs near $4,700.

The sell-off comes as traders overwhelmingly price in a 25-basis-point rate increase at the conclusion of the Fed’s two-day meeting on Wednesday. The CME FedWatch Tool, cited by several outlets, showed the probability of a hike at roughly 88–92%, a sharp jump from about 67% before last week’s inflation data. Fed Chair Kevin Warsh’s press conference after the decision will be closely watched for clues on the path ahead.

**Higher Yields, Stronger Dollar Add Pressure**

The 10-year U.S. Treasury yield breached the 5% mark on Tuesday, touching 5.04%—its highest level since 2007, according to reports from both the Times of India and Bloomberg. That move sharply raised the opportunity cost of holding non-yielding gold. A stronger dollar, which climbed to a more-than-one-week high, further pressured bullion for buyers holding other currencies.

Oil prices have been a key driver of the inflation-led rate hike narrative. Brent crude surged above $108 a barrel on Monday after Houthi drone strikes on Saudi Arabia’s East-West pipeline forced its shutdown, and following Iranian attacks on Gulf shipping that raised supply disruption fears. A diplomatic meeting between Gulf states and Iran in Oman was postponed hours before it was due to begin, according to RTTNews, citing a statement by Oman’s foreign minister.

However, some relief emerged on Wednesday after a surprise build in U.S. crude inventories sent oil prices lower. In response, Comex gold futures bounced 1.22% to $4,351.40 per ounce in early Wednesday trade, said RTTNews, partially recovering earlier losses. Still, the metal’s near-term outlook remains cautious.

**Analysts: Fed Guidance Is the Key Swing Factor**

“If the Fed keeps the door open to further tightening, gold may be more vulnerable and move lower towards $4,000 an ounce if key support at $4,250 is broken,” said Christopher Wong, a strategist at OCBC, as reported by the Business Times.

UBS analyst Giovanni Staunovo was quoted by NDTV Profit as saying markets are fully pricing in a Fed rate hike after the CPI data, and that higher oil prices could intensify inflation concerns.

Anand Rathi’s research analyst Vedika Narvekar, in a note carried by the Times of India, said gold’s near-term outlook “stays cautiously bearish, with Fed guidance the key swing factor.” She added that persistent fiscal concerns and central-bank buying remain structural supports, but a sustained break below $4,300 could push prices to $4,250–$4,190. A rebound would test $4,440–$4,500.

Goldman Sachs, HSBC, Citi, JPMorgan and Morgan Stanley are all forecasting a 25-basis-point rate increase this week, multiple sources reported.

**Broader Precious Metals Decline**

Silver followed gold lower, with spot silver falling 1.3% to $62.96 an ounce on Monday, and trading little changed around $63.68–$64.60 in Asian hours Wednesday. Platinum dropped 1.4% and palladium also edged down, according to reports.

In India, MCX gold futures for October were down 1.26% to ₹1,50,856 per 10 grams on Monday, while silver December futures fell 1.9% to ₹2,30,513 per kg. Physical gold prices in Delhi stood at ₹14,140 per gram for 22-carat and ₹15,424 for 24-carat, according to the Economic Times.

With the Fed decision hours away, markets remain fixated on whether Chair Warsh signals the start of a broader tightening cycle or frames the move as insurance against oil-driven inflation. Either outcome will set the tone for gold’s path in the weeks ahead.