FX.co ★ Gold Holds Gains as Rate Hike Fears Ease

Gold hovered near $4,200 an ounce on Monday, consolidating last week’s gains as weaker-than-expected US employment data and softer oil prices prompted traders to scale back expectations for further Federal Reserve interest rate hikes. Crude prices slipped as improving energy flows through the Strait of Hormuz and the prospect of additional OPEC+ supply heightened concerns about a possible glut. The resulting easing of inflationary pressures has tempered fears of more rate increases, which had previously weighed on non-yielding assets such as gold.

Data released last week showed US nonfarm payrolls rose by just 57,000 in June, the smallest increase in four months and well below the consensus forecast of 110,000. That surprise weakness led market participants to pare back bets on a rate move in September. According to the CME FedWatch tool, the implied probability of a September hike dropped to 50%, from 66% before the report was published.