Gold Price Hits 13-month Lows as Fed Rate Hike Fears Mount

On Friday, gold prices hovered near a 13-month low as bond yields increased on expectations of an aggressive Fed rate hike, dampening the precious metal's appeal.

At 06:00 GMT, spot gold was at $1,663 per ounce after hitting its lowest level since April 2021 at $1,659 on Thursday. Prices have fallen 3.1% so far this week. The price of gold futures in the US fell 0.4% to $1,671.40 on Friday.

According to Yep Jun Rong, market strategist at IG, gold appears to be stabilizing after a sharp overnight sell-off. The Federal Open Market Committee (FOMC) meeting next week, where an aggressive Fed decision is expected, could continue to push prices lower. Benchmark 10-year Treasury yields fluctuated around their highest levels since June as the dollar sought weekly gains against its peers.

The US Federal Reserve is expected to raise interest rates by 75 basis points at its September 20-21 monetary policy meeting after consumer prices rose unexpectedly in August. Last week, US jobless claims fell as lower gasoline prices supported spending. Retail sales in August rose unexpectedly as a result of lower gasoline prices. In 2023, everyone is interested in knowing if the Fed will continue to tighten aggressively. 

The daily chart of gold prices suggests that the strongly holding demand zone has been broken. The next stop for the gold is the ultimate level at $1,600. However, it is not sure whether the bulls will appear at that support level.

Alternatively, any surge in the gold price at current levels may provide a sigh of relief. However, the bears will keep dominating below the $1,700 mark.  

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