Gold Stalls Near $4,300 as US Dollar Gains Ahead of NFP Report
Gold prices hovered near $4,300 as the US dollar strengthened ahead of Friday's highly anticipated Nonfarm Payrolls (NFP) report. The precious metal's modest gains come despite recent warnings from prominent Federal Reserve officials that persistent inflation risks could necessitate further interest rate hikes.
Fed Governor Lisa Cook stated that inflation remains too high and she is prepared to act by raising interest rates if disinflation stalls, warning that the central bank cannot afford to wait indefinitely if price pressures fail to ease. San Francisco Fed President Mary Daly noted that officials need more data before the September meeting to see if inflation is temporary or lasting.
The CME FedWatch tool still shows markets pricing in an 80% chance of a US interest rate hike by year-end amid inflation risks stemming from supply disruptions. However, the probability for a September Fed rate hike eased to roughly 55% from 67% following softer-than-expected data on private-sector employment and the Services Purchasing Managers Index (PMI).
Investors may be cautious in taking positions ahead of Friday's NFP report, which could provide more clarity on the Fed's future policy path. The Middle East crisis and developments surrounding a potential US-Iran peace deal also remain key factors influencing market sentiment.