Gold Hits Seven-Week Low as Fed Rate Hike Odds Reach 70%

Gold prices hovered near a seven-week low on Tuesday as investors increasingly priced in a Federal Reserve rate hike in October, with traders seeing about a 70% probability of an increase. Spot gold rose 0.4% to $4,130.58 per ounce after touching its lowest level since August 5. The shift in rate expectations has pushed US 10-year Treasury yields to 5.27%, raising opportunity costs for non-yielding gold and strengthening the dollar. Fed Governor Lisa Cook cited inflation concerns from AI investments and higher oil prices, while analysts noted Chinese profit-taking before Golden Week added to Monday's selloff. Gold approaches a key support zone around $4,100, with $4,000 as the next level if breached. This week's US jobs data and PCE inflation figures could shift expectations, while gold-backed ETFs saw $18 billion in August inflows, the second-largest monthly gain on record.