Gold Rebounds Sharply After Yen Surge, Fed Rate Hike Bets Soar

Gold prices have rebounded sharply after hitting an intraday low of $4,282 on Wednesday, following a sudden rise in the Japanese Yen (JPY) that triggered broad selling pressure on the US Dollar (USD). The move was also visible across other Yen pairs, with EUR/JPY, GBP/JPY and AUD/JPY falling sharply. However, there is no official confirmation of intervention by Japanese authorities.

The pullback in US Treasury yields has provided additional support to Gold, but the metal's broader outlook remains challenging due to hostilities in the Middle East that have sent Oil prices higher, fuelling inflation concerns and a sell-off in global bonds. Elevated US Treasury yields increase the opportunity cost of holding non-yielding Gold.

Traders are increasing bets on a potential rate hike by the Federal Reserve (Fed) as soon as September, particularly after Fed Chair Kevin Warsh adopted a tougher stance on inflation at the Jackson Hole Symposium last week. The probability of a rate hike at the September 15-16 meeting stands at around 70%, up from 36% a week ago.