Gold Prices Steady Near $4,400 as Fed Rate Hike Odds Rise
Gold prices held steady near $4,400 an ounce on September 7, as investors weighed the risks of renewed US-Iran clashes in the Strait of Hormuz against a roughly 60% probability that the Federal Reserve will raise interest rates at its meeting next week.
The stronger-than-expected August payrolls report and escalating military tensions have pushed rate hike expectations up from the more balanced outlook before the labor data landed, according to futures markets.
Higher borrowing costs typically work against gold, which pays no interest and becomes less attractive when yields on cash and bonds rise. However, a weaker dollar, trading at its lowest level against the yen since February, has provided support for gold prices.
The US currency's decline makes dollar-denominated gold cheaper for buyers using other currencies, lending underlying support to prices.