XAU/USD rises 1% on softer USD and lower Treasury yields, though Fed rate hike bets and Middle East tensions limit upside.
Gold prices climbed 1% to $4,116 on Thursday, recovering from three straight days of losses as the US Dollar (USD) softened and Treasury yields pulled back. The move offered brief relief after a sell-off driven by rising Fed rate hike expectations and geopolitical tensions.
Markets are now pricing a 63% chance of a Fed rate increase in September, according to the CME FedWatch Tool. Meanwhile, renewed US-Iran hostilities, including threats to disrupt oil flows via the Strait of Hormuz, have stoked inflation fears and supported the USD, capping gold’s advance.
The US Dollar Index (DXY) traded near 100.97 after dipping to an intraday low of 100.79, reflecting mixed sentiment. Risk appetite remained subdued as investors weighed the potential for further escalation in the Middle East.