Gold Surges Over 1% as Weaker Dollar and Lower Yields Boost Demand
Gold prices climbed more than 1% on Thursday, reclaiming the $4,400-per-ounce level as a weaker U.S. dollar and declining Treasury yields eased some of the pressure on the precious metal caused by recent expectations of higher Federal Reserve interest rates.
Investors are now focused on Friday’s U.S. nonfarm payrolls report for clues about the Fed’s next major policy move. The dollar’s decline, coupled with a sharp rally in the Japanese yen, provided additional support for gold amid ongoing concerns over potential currency market intervention.
As of 15:58 WIB, XAU/USD rose 1.1% to $4,436.50 per ounce, while Gold Futures gained 1.5% to $4,482.61. Silver (XAG/USD) advanced 0.9% to $65.94 per ounce, while platinum (XPT/USD) climbed 1.1% to $1,779.24. Meanwhile, the U.S. Dollar Index slipped 0.4% to 99.21.
Fed Signals Cooling Inflation as Job Growth Slows
Comments from New York Federal Reserve President John Williams gave investors fresh reasons to reassess the interest-rate outlook.
Williams said there is growing evidence that U.S. inflation continues to moderate as the impact of tariffs fades. He also noted that higher energy prices have not significantly spread into the broader services sector.
Recent labor market data reinforced that softer economic picture. According to the latest ADP employment report, U.S. companies added just 38,000 jobs in August.
The slower pace of hiring has further reduced expectations of aggressive monetary tightening by the Federal Reserve.
However, these developments contrast with the more hawkish tone struck by Fed Chair Kevin Warsh during his Jackson Hole speech last week.
Warsh’s remarks fueled speculation that the central bank could raise interest rates to keep inflation under control when policymakers meet in roughly two weeks.
Trump Signals Limited Strike as Oil Rally Loses Momentum
Gold’s rebound extended into a second session after the precious metal touched its lowest level in nearly four weeks on Wednesday. The latest recovery has been supported by a weaker dollar and easing U.S. Treasury yields, reducing two major headwinds that had weighed on bullion prices.
Former President Donald Trump indicated that the latest U.S. military action against Iran would likely be brief. His comments helped cool the recent rally in oil prices and eased some inflation concerns that had pressured gold.
Nevertheless, the renewed conflict has revived fears of a broader and more prolonged regional confrontation. Continued disruptions to global energy supplies could push oil prices higher, potentially fueling inflation and making the Federal Reserve more reluctant to loosen monetary policy.
Higher interest rates typically weigh on gold because the metal does not generate income. When bond yields and policy-rate expectations rise, investors often find income-producing assets more attractive than non-yielding bullion.
Gold had already gained as much as 1.6% on Wednesday, supported by a weaker U.S. dollar following a sharp surge in the Japanese yen.
