Gold Surges 2% Amid Shift in Rate Hike Expectations

Gold prices surged more than 2% on Thursday as traders scaled back expectations of a September rate hike after Federal Reserve Governor Christopher Waller said he would support leaving interest rates unchanged if data continues to show inflation pressures moderating.

Spot gold rose 2.3% to $4,488.54 per ounce by 02:04 p.m. ET (1804 GMT), with U.S. gold futures settling 2.8% higher at $4,539.9. Waller's comments sparked a shift in market expectations, with traders now seeing about a 54% chance of a rate hike when policymakers meet on September 15 to 16, down from around 62% previously.

'I think traders at the moment are looking at the Fed being less aggressive with rates,' said Bob Haberkorn, senior market strategist at StoneX. 'More and more traders are coming around to the idea that (the Fed) could do one rate hike, but there probably isn't much more they can do with rates after that.'

Lower Treasury yields added support to bullion by reducing the opportunity cost of holding non-yielding gold, while a weaker U.S. dollar made greenback-priced bullion more affordable for overseas buyers.