Gold Rebounds from One-Week Low Amid Hawkish Fed Expectations

Gold has rebounded modestly from its one-week low as the US Dollar and Treasury yields ease. The precious metal trades around $4,310 at the time of writing, but remains on track for a weekly loss due to hawkish Federal Reserve expectations.

The central bank's 25-basis-point rate hike last week and updated projections showing 16 out of 18 policymakers expecting at least one more increase this year have driven up bets on another rate increase as early as next month. The CME FedWatch Tool now shows around a 71% probability of a hike at the October meeting.

A stronger US Dollar makes Gold more expensive for foreign buyers, while higher yields increase the opportunity cost of holding the non-yielding metal. Higher Oil prices caused by the war in the Middle East are also adding to inflation pressures, complicating the Fed's efforts to bring inflation down to the 2% target.

Next week's data releases, including PCE inflation, ISM Manufacturing PMI, and Nonfarm Payrolls, could play a major role in shaping expectations for the Fed's October meeting. Technical analysis suggests XAU/USD maintains a constructive near-term tone as it holds above the 20-period Simple Moving Average and the Bollinger middle band.