Gold Gains as Fed Pause Expectations Rise with Weaker Dollar

Gold prices rose last Friday, ending the week higher after US inflation data and nonfarm payrolls figures were in line with market expectations. This reinforced the likelihood of a Federal Reserve pause on interest rates next month.

The weaker US Dollar Index also contributed to gold's gains, making dollar-denominated gold more attractive to overseas buyers. Spot gold rose 0.7% to $4,379.95 per ounce, while December gold futures gained 0.4% to settle at $4,437.30 per ounce.

The soft inflation and employment data led market analysts to reduce their expectations of further near-term rate hikes by the Fed. The CME FedWatch Tool now prices in a 33% probability of a Fed rate hike in September, down from 55% a week earlier.