Gold Holds Ground Near June High Amid Weakening Dollar

Gold prices have steadied near their June high of $1,974 per ounce as market participants scale back expectations for further Federal Reserve interest rate hikes. The US Dollar Index has retreated from recent highs due to softer inflation figures and a cooling labor market, making dollar-denominated gold more attractive to international buyers.

The Fed's policy path is under reassessment after economic data showed a decline in rate hike bets. CME Group's FedWatch tool indicates a notable decrease in the probability of a rate increase at the next Federal Open Market Committee meeting. Lower rate expectations have reduced the opportunity cost of holding gold, making it more appealing compared to interest-bearing assets like Treasuries.

Analysts point to central bank buying, geopolitical uncertainty, and expectations that the Fed may be nearing the end of its tightening cycle as factors supporting gold's current price action. However, some strategists caution that gold's upside may be limited if the US economy remains resilient, which could prompt the Fed to keep rates higher for longer.