Gold Holds Ground Near 10-Week Highs Amid Weakened Rate Pressure

Gold prices held near their 10-week high around $4,405-4,415 per ounce as lower September Fed hike odds reduced rate pressure ahead of July's Consumer Price Index (CPI) announcement. The sharp decline in July payrolls from a forecasted gain of 83,000 to a loss of 23,000 cut the case for higher rates and weakened a key headwind for gold.

The Cleveland Federal Reserve President Beth Hammack recently stated that multiple hikes may be needed to return inflation to target, keeping further rate pressure on gold in play. However, with September Fed hike odds falling from roughly two-thirds to under 45%, the near-term rate pressure on gold has reduced.

Central banks bought a record 289 tonnes of gold in Q2, up 62% year-over-year, led by Poland at 51 tonnes and China at 33 tonnes. This sharp recovery was driven by physical demand rather than price momentum, supporting the contrarian case for buying gold.