Gold Holds Above $4,050 as Easing Inflation Fears Curb Fed Hike Bets
The US dollar (USD) staged a modest recovery from its lowest level since June 17 and turned out to be a key factor acting as a headwind for gold. However, renewed hopes for a US-Iran peace deal and receding US Federal Reserve (Fed) rate hike expectations helped the non-yielding bullion preserve gains above $4,050.
The recent developments in the Middle East crisis have infused volatility in financial markets. The OPEC+ decision to increase production in September triggered a steep decline in crude oil prices, easing inflation fears and tempering bets for a more aggressive Fed policy tightening.
Despite the US dollar's bounce, traders seem hesitant to place fresh bearish bets around the currency and are waiting for further developments around the Middle East crisis. The focus remains glued to incoming geopolitical headlines, which might continue to drive the USD demand.