Gold Soars as Fed Rate Hike Bets Eased, Iran Tensions Ease

Gold prices surged to their highest level since mid-June as investors scaled back bets for a Federal Reserve interest rate hike in September. The precious metal rallied on cooling geopolitical tensions, falling crude oil prices, and a decrease in US Treasury yields.

The FedWatch Tool's probability for a September rate increase fell from nearly 70% to about 55%, leading to a decline in US bond yields and fueling gold's upsurge. Minneapolis Federal Reserve President Neel Kashkari also adopted a more cautious tone on policy tightening, further weighing on the US dollar.

Analysts at OCBC noted that gold's strength suggests investors are pricing in a de-escalation of the US-Iran conflict and lower real interest rates. However, market participants will continue to pay close attention to developments in the Middle East, as tensions could impact gold prices.