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Gold rises as a weaker dollar cools Fed rate-hike odds

XAU/USD was last near $4,386, while the US Dollar Index fell 0.4% to 99.57 and swaps showed September hike odds at 31%, down from about 55% last week.

Reported · Written up by our desk · Major Pairs

Gold prices climbed nearly 0.9% on Friday as the US dollar weakened broadly, with investors dialing back expectations for a Federal Reserve rate hike after softer US inflation and other data, FXStreet reports.

XAU/USD traded around $4,386, still below the $4,400 level, while the US Dollar Index fell 0.4% to 99.57. The week’s dollar sell-off was tied to eased July inflation, a modest rise in initial jobless claims, and weaker retail sales, including a 0.6% drop in retail sales and a 0.4% decline in the control group used for GDP.

Additional sentiment signals included a deterioration in the University of Michigan consumer sentiment reading, which fell from 55.2 to 51.0 in August preliminary data, and changes in inflation expectations. FXStreet also linked gold’s strength to weaker Treasury yields, citing the US 10-year yield at 4.684%, up 3.5 basis points.

Looking ahead, FXStreet said swaps markets are pricing a 31% probability of a September rate hike, down from about 55% last week. It added that gold is consolidating around the 100-day simple moving average near $4,386, and that a move back above $4,400 is needed for buyers to regain momentum.

Latest closeGold $4,432.00 ▲1.6%|Dollar index 99.64 ▼0.3%

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