Gold Surges on Weaker Dollar, Reduced Rate Hike Expectations

Gold prices rebounded sharply on Thursday after a weaker US dollar, falling Treasury yields, and reduced expectations for a September Federal Reserve rate hike lifted demand for bullion.

The spot gold price jumped over 2% to reach $4,488.54, while US gold futures settled at $4,539.90.

Federal Reserve Governor Christopher Waller's comments that he could support keeping interest rates unchanged if inflation continues to moderate contributed to the turnaround.

Waller's remarks reduced the market-implied probability of a September rate hike from 63% to around 50%, which in turn pushed Treasury yields lower and the US dollar weaker.

The relationship between Fed expectations, US Treasury yields, and the US dollar remains crucial for gold traders, with a weakening chain potentially supporting the gold price.