Gold Holds Firm Near $4,400 as Fed Hike Expectations Fade

Gold prices are holding firm near $4,400 an ounce according to Saxo Bank's Ole Hansen. The interest rate backdrop has shifted in gold's favour with softer US employment, inflation and consumer data reducing pressure on the Federal Reserve to tighten further.

Hansen notes that Goldman Sachs chief economist Jan Hatzius recently called a September hike very unlikely, aligning with Saxo's own long-held view that the Fed will struggle to raise rates further from here.

The dollar has also begun to soften, with the Bloomberg Dollar Index rolling over after its earlier strength this year. However, bond yields remain the main headwind for gold, sitting close to multi-year highs despite softer data.

Hansen attributes part of this to a rising fiscal and term risk premium rather than growth or policy expectations, pointing to Congressional Budget Office projections that net federal interest costs will exceed $1 trillion in 2026.