Federal Reserve interest rate hike probability reaches 87% ahead of FOMC

Markets are closely monitoring the upcoming September FOMC meeting, with CME FedWatch indicating an 87% probability of an interest rate hike. This anticipation follows recent inflation data, including the August Producer Price Index (PPI) and Consumer Price Index (CPI). While the headline CPI rose 0.4% month-over-month, core inflation remains a key focus for determining whether the Federal Reserve will signal further tightening or a pause in hikes.

Gold prices have faced pressure from rising inflation, increasing oil prices due to Middle East tensions, and rising long-term Treasury yields. Despite a recent dip, gold saw some recovery as CPI results met market expectations, avoiding extreme shocks.

Additionally, the U.S. Treasury's recent attempt to stabilize the market through a $5.18 billion buyback of long-term bonds met with a lukewarm market response. Instead of calming volatility, 10-year Treasury yields rose toward 5%, reflecting market skepticism and concerns over long-term interest rate trends.