Gold Prices Rebound Amid Hawkish Fed Expectations
Gold prices rebounded in European trading on Friday, holding above a one-week low of $4,300 an ounce reached earlier in the Asian session. The metal rose 0.95% to $4,359.31 after recording its lowest level since September 2.
The recovery is short-lived as gold remains on track for a third consecutive weekly loss due to the rising US dollar and increasing long-term US Treasury yields. Investors are awaiting key US inflation data for August, which will provide crucial signals about the likelihood of the Federal Reserve raising interest rates next week.
The probability of a 25-basis-point rate hike increased from 60% to 72%, according to the CME FedWatch Tool, following strong US economic data. If US inflation data are less hawkish than markets currently anticipate, expectations for a Federal Reserve rate hike in September may decline, potentially halting the recovery in the US dollar and the rise in US Treasury yields.