Gold Rises for Third Consecutive Session on Weaker Dollar and Fading Rate Hike Bets
Gold prices rose for a third consecutive session on Wednesday, supported by a softer U.S. dollar and a drop in oil prices, as investors eagerly await upcoming U.S. employment data for clues on the future trajectory of interest rates.
Spot gold climbed 2.12% to $4,166.72 per ounce, hitting a one-month high, while U.S. gold futures gained 1% to settle at $4,191.90.
The U.S. dollar remained weak, making greenback-priced metals more attractive and affordable for holders of other currencies. Meanwhile, oil prices continued their downward trend following sharp declines in the previous two trading sessions. Lower crude prices could alleviate inflation fears, which typically fuel expectations for further interest rate hikes.
Geopolitical Developments
On the geopolitical front, Qatar announced that mediators are making progress in efforts to end the war between the United States and Iran. However, Tehran denied U.S. President Donald Trump's assertions that negotiations have already commenced.
Kelvin Wong, Senior Market Analyst at OANDA, commented on the market dynamics:
"The correlation between gold and oil still holds, as oil prices heavily influence the global economy in terms of inflationary pressures. If we get a clear roadmap for further de-escalation of tensions, gold prices could move higher."
Fading Rate Hike Bets
Traders are currently pricing in a 59% probability that the Federal Reserve will raise interest rates during its upcoming monetary policy meeting scheduled for September 15 and 16, marking a notable decline from the 67% probability priced in just a day earlier.