XAU/USD rises 0.6% to $4,050 as traders reduce hawkish Fed expectations amid softer inflation signals and a weaker dollar.
Gold prices climbed 0.6% to near $4,050 in European trading Friday, recovering from support at $3,960. The rally follows a pullback in the US Dollar Index, which fell 0.25% to 101.20 after hitting a yearly high of 101.80 earlier this week.
Market expectations for Federal Reserve rate hikes have softened, with the CME FedWatch tool showing a 41.7% chance of at least two hikes this year, down from 50.2% a week ago. The shift comes as oil prices stabilize and US core PCE inflation held steady at 3.4% YoY in May, matching forecasts.
Technically, gold remains below its 20-period EMA at $4,232.13, maintaining a near-term bearish bias despite the rebound. The metal’s recovery is tied to USD weakness and recalibrated Fed policy bets.