Gold Prices Hold Near $4,500 as Fed Rate Hike Bets Ease

Gold prices hovered near $4,500 an ounce on Thursday, extending a strong rebound as Federal Reserve Governor Christopher Waller’s comments reduced expectations for a September interest rate hike.

A softer U.S. dollar and lower Treasury yields also supported bullion, while investors turned their attention to Friday’s U.S. nonfarm payrolls report and inflation figures due next week.

At 21:03 ET (01:03 GMT), spot gold rose 0.1% to $4,479.58 an ounce, while gold futures slipped 0.3% to $4,525.49. Silver gained 0.1% to $67.05 an ounce, while platinum declined 0.5% to $1,813.71. The U.S. Dollar Index was broadly steady at 98.98.

Gold had surged nearly 2% on Wednesday, ending a three-session losing streak. The recovery accelerated after Waller indicated he could support keeping interest rates unchanged at the Federal Reserve’s September 15-16 meeting if incoming economic data confirm that inflation is cooling.

Waller said August inflation figures would play an important role in his decision, although he did not rule out another rate increase if price pressures strengthen.

Following his remarks, market expectations for a September Fed rate hike fell to roughly 50%, down from around 70% earlier in the week. Lower interest rates typically benefit gold because the precious metal does not pay interest, making it more attractive when yields decline.

Dollar weakness provided additional support. The Japanese yen strengthened nearly 2% on Thursday, marking its biggest daily advance since Japanese and U.S. authorities intervened in currency markets more than a month earlier. A weaker dollar generally makes dollar-denominated gold cheaper for overseas buyers.

Investors are now watching Friday’s U.S. payrolls report for further clues about monetary policy. Gold recently fell as low as $4,282, its weakest level in nearly four weeks, before rebounding sharply.

IG senior market analyst Tony Sycamore said easing pressure from energy prices, Treasury yields and the dollar helped gold recover as Middle East tensions appeared to moderate. While bullion’s break below its 200-day moving average near $4,526 caused short-term technical damage, Sycamore said gold remaining above the $3,942 late-June low continues to support the broader medium-term outlook.