Gold fell last week as investors bet on further rate hikes by the Fed. Economists at TD Securities analyze XAU/USD outlook.

High probability of another 25 bps in late-July

Investors are worried that a lack of economic weakness in the US and core inflation trending more than double the US central bank's inflation target will force policymakers to deliver on additional rate hikes in the coming months. Indeed, the futures market is pricing a high probability of another 25 bps in late July. 

While there are fewer price pressures in the economy, recent data suggest that rates will move higher on the front end of the curve and stay at elevated levels for some time, which implies that Gold will continue to have little reason to move significantly higher anytime soon.