Gold Struggles to Break $4,100 Amid USD Rebound and Fed Hopes

Gold prices have been struggling to break through the $4,100 level, but remain on track to end its four-month losing streak. The US Dollar's (USD) rebound from six-week lows against major currency rivals has revived haven demand for the Greenback, pushing gold down.

The USD's resurgence is partly due to hopes that the US Federal Reserve (Fed) will opt for interest rate hikes later this year, despite Fed Chair Kevin Warsh's noncommittal stance on further tightening. Analysts at HSBC highlight that the Fed left interest rates unchanged for a fifth consecutive meeting, but stress that the 9-3 vote revealed a lively debate within the FOMC.

Gold also bears the brunt of disappointing Chinese official business PMI data for July and traders' caution ahead of the Bank of Japan (BoJ) monetary policy decision. However, a potential hawkish hold decision by the BoJ could revive JPY buyers and smash USD alongside, providing a tailwind for gold.