Gold Holds Steady Amid Weakening USD and Firming Fed Hopes

Gold prices have been steady at around $4,450 through the first half of the European session on Thursday, despite its recovery from a nearly four-week low for the second straight day.

The US Dollar (USD) has hit a one-week low, which is seen as a key factor supporting gold. However, firming Federal Reserve (Fed) rate-hike expectations and inflation risks stemming from higher energy prices are acting as a tailwind for US bond yields.

Fed Chair Kevin Warsh's hawkish remarks last Friday have lifted the expectations of a 62% chance that the Fed will hike rates at its upcoming September 15-16 policy meeting, according to CME Group's FedWatch Tool.