Fed Rate Hike Expectations Cool, Precious Metals Rally

A recent speech by New York Fed President John Williams has cooled market expectations for an October rate hike, from around 70% to about 50%. This follows his comments that if the economy evolves broadly in line with his expectations, another rate hike later this year may be appropriate. However, he stressed that the Fed's September rate hike has already bought policymakers more time to observe, and 'there is no need to rush.'

The weakening US dollar index, global geopolitical uncertainty, and central banks' strong gold purchase demand have also supported the strength of precious metals. As a result, COMEX gold rose 0.55% to $4,202.8/oz, SHFE gold main contract rose 1% to 906.8 yuan/g, and COMEX silver rose 0.28% to $61.325/oz.

In the stock market, the precious metals sector rose 1.23%, with individual stocks such as Shandong Gold rising more than 3%. Some analysts believe that despite Williams' dovish remarks, the most likely outcome is to skip October and hike in December, based on previous Fed actions.