Traders cut bets on a September Fed rate increase after mixed signals from the central bank’s latest policy update.
Gold prices rose to $4,110 in early Asian trading Friday, extending gains as markets scaled back expectations for a Federal Reserve rate hike. The shift followed Wednesday’s Fed decision to hold rates steady at 3.50%-3.75%, coupled with ambiguous remarks from Chair Kevin Warsh on inflation policy.
Prior to the meeting, markets priced a 77% chance of a September hike, but that probability fell to 63.4% after the Fed’s announcement, per CME FedWatch data. Gold, which offers no yield, typically benefits from lower interest rates but faces pressure when borrowing costs rise.
Geopolitical tensions in the Middle East, including Iranian threats to close the Strait of Hormuz, may limit further upside by supporting crude oil prices and prolonging elevated rates.