Gold rebounded above $4,400 an ounce on Wednesday, snapping a three-session decline as a softer dollar offset lingering Fed rate-hike risk. Middle East tensions and record Chinese central-bank buying kept underlying demand for the metal intact even as traders priced in a roughly 60% chance of a Fed rate hike this month.
Dollar weakness snaps the slide
XAU/USD rose 1.1% to $4,402.41 an ounce, while gold futures gained 0.2% to $4,445.85. Silver and platinum moved higher too, with XAG/USD up 1.5% to $66.76 and XPT/USD up 1.6% to $1,848.23. The rally came as the U.S. Dollar Index fell 0.2% to 98.70, giving bullion room to recover after a 2.6% drop over the prior three sessions.
Gold still trades well below last week's levels, however. Stronger U.S. payrolls data revived expectations that the Federal Reserve could raise interest rates at its Sept. 14 to 15 meeting, and markets are still pricing roughly a 60% chance of a hike. Higher rates weigh on gold because bullion pays no interest, so rising yields pull investors toward income-generating assets instead. Traders are now watching U.S. inflation data due later this week: a hotter print would reinforce the case for a hike, while a softer one would give the Fed room to hold rates steady.
Middle East risk and central-bank buying offset the pressure
U.S. forces recently destroyed five Iranian oil tankers carrying crude near Kharg Island, Iran's main oil export hub, after an attempted missile attack on an American warship. The incident raised fears that the months-long conflict could escalate further and disrupt regional energy flows. Separately, Brent crude has remained close to $100 a barrel, keeping inflation risks elevated ahead of the Fed decision.
ANZ analysts said investors appear to be stepping back from the gold market ahead of the FOMC meeting, with rising energy costs feeding into higher bond yields and creating a headwind for bullion. They added that the pressure has not stopped central-bank buying: China's central bank bought about 650,000 ounces of gold in August, its largest monthly addition since 2023. Gold has stayed in a relatively narrow range around $4,400 since rebounding from the $4,000 area in July. The recent pullback has pushed it below its 200-day moving average, though central-bank demand keeps providing a counterweight.
Source: Investing.com
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