FX.co ★ Gold Rebounds as Fed Rate-Hike Bets Fade

Gold rose to around $4,470 an ounce on Thursday, rebounding from more than three-week lows as the US dollar and Treasury yields pulled back from recent highs following dovish remarks by Federal Reserve officials.

Expectations for a September interest rate increase were scaled back after Fed Governor Christopher Waller said he sees continued progress on inflation and would support leaving rates unchanged at the upcoming meeting if the August data confirm that trend. His comments followed those of New York Fed President John Williams on Wednesday, who noted that there is evidence inflation is continuing to ease as the impact of tariffs wanes.

Adding to that view, a weaker-than-forecast ADP employment report signaled a cooling US labor market. Following these developments, traders now assign roughly a 50% probability to a September rate hike, down from about 62% prior to Waller’s remarks.

Investors are now looking ahead to Friday’s nonfarm payrolls report and next week’s inflation releases for additional guidance on the Fed’s policy path.