Gold Rises for Two Consecutive Days on Diminished Rate Hike Expectations

Gold prices have posted gains for two straight trading sessions amid a dimmed outlook for Federal Reserve rate hikes and a weaker U.S. dollar, making bullion more affordable for most buyers.

Spot gold steadied around $4,420 per ounce, having accumulated a 1.5% increase over the previous two trading days. Disappointing U.S. economic data has pushed the U.S. Dollar Index down to its lowest level since May. Meanwhile, swap markets no longer fully price in another Fed rate hike before the end of the year, a notable shift from market expectations just one week ago.

The yield on the 30-year U.S. Treasury bond has climbed to a nearly 20-year high, reflecting market concerns over surging government spending, expanded long-term bond issuance and persistent inflationary pressures. Market analyst Hansen noted that this has created an unusual yet favorable backdrop for gold, as investors turn to the precious metal to hedge against elevated government debt burdens.

Nevertheless, upside risks for gold remain. Lingering monetary tightening concerns continue to cap gains for the non-yielding precious metal. In addition, geopolitical tensions in the Middle East remain unresolved. Conflict has flared up again in Lebanon, and U.S. President Donald Trump has stated that he has no intention of extending the temporary ceasefire agreement with Iran reached in June. Shipping conditions in the Strait of Hormuz stay tense, with frequent vessel attacks disrupting traffic along this critical global maritime route.

Gold prices have recently broken above the key threshold of $4,000 per ounce, driven by a rebound in investor demand and robust gold purchases by global central banks, particularly the People’s Bank of China. Gold rallied last week to break above its 100-day moving average for the first time since April, and has been trading steadily around this technical level.

Traders are closely monitoring key Fed policy cues due for release this week. The minutes from the Federal Reserve’s July policy meeting, set to be published on Wednesday, will offer further clues on the central bank’s interest rate path. Market participants will also pay close attention to remarks by Fed officials at the annual Jackson Hole Symposium later this month.

As of 8:05 a.m. Singapore time, spot gold edged up 0.2% to $4,425.80 per ounce. Silver rose 0.3% to $65.98 per ounce, platinum posted a modest gain, while palladium traded flat. The U.S. Dollar Index dipped 0.1%, extending its losing streak for a fourth consecutive trading day.

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