Gold climbs on weaker dollar, rate outlook and Middle‑East violence
By 10:18 ET (14:18 GMT) spot gold had risen 1.4% to $4,416.92 per ounce, while gold futures inched up 0.5% to $4,461.90 per ounce. The U.S. dollar index, which tracks the greenback against a basket of currencies, was largely unchanged at 98.77, with several Reuters‑cited analysts attributing the dollar’s relative weakness to recent strength in the Japanese yen.
A softer dollar makes gold cheaper for overseas buyers, supporting the metal’s advance. At the same time, Brent crude futures breached the $100‑a‑barrel threshold as renewed attacks between Iran and the United States intensified, reviving concerns over energy‑driven inflation and supply disruptions through the Strait of Hormuz.
Market participants now assign roughly a 60% probability that the Federal Reserve will raise its policy rate by 25 basis points at the upcoming meeting, up from 40% a week earlier. Policymakers are signalling a focus on curbing inflation, while recent labor‑market resilience bolsters the case for a rate hike. Higher rates would increase the opportunity cost of holding non‑yielding gold, potentially dampening demand.
"Gold has recently come under increased pressure following a change in expectations around U.S. interest rates," said Rick Kanda, Managing Director at The Gold Bullion Company. He noted that gold surged nearly 10% in August, its best monthly gain since January, and warned that rapid price gains may prompt profit‑taking. Kanda projected that gold could retreat toward its late‑August peak of $4,685 per ounce, but cautioned that “considerable fluctuations” are likely. He added that if rate‑hike expectations continue to rise, prices could fall into the low‑$4,000s.
The article also references a six‑month‑old conflict in the Middle East that has roiled global markets, with fresh rounds of attacks heightening geopolitical risk and reinforcing worries about oil supply shortages.