Gold Holds Near $4,500 as Fed's Waller Cools September Rate Hike Bets

Gold prices held steady near $4,500 an ounce in Thursday trading, maintaining gains from a nearly 2% surge in the previous session. The rally was fueled by comments from a key Federal Reserve official that cooled market expectations for another interest rate hike in September.

At 9:03 PM ET (01:03 GMT), spot gold was trading up 0.1% at $4,479.58 per ounce, while gold futures for December delivery slipped 0.3% to $4,525.49 an ounce, according to Investing.com data. A weaker U.S. dollar and a retreat in Treasury yields also contributed to the positive sentiment for the non-yielding asset.

Waller's Comments Shift Rate Outlook

The primary catalyst for gold's rebound was a dovish tilt from Federal Reserve Governor Christopher Waller. On Wednesday, Waller signaled that if upcoming data confirms a continued moderation in inflation, he could support keeping interest rates unchanged at the central bank's September 15-16 meeting.

Waller emphasized that the August inflation report would be a critical factor in his decision. Following his remarks, market pricing for a September rate hike fell sharply from around 70% earlier in the week to a probability closer to 50%, according to market indicators. Lower interest rates decrease the opportunity cost of holding gold, which does not offer a yield.

Market Backdrop and Technical Levels

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Gold's advance was also aided by a softer U.S. dollar, which makes the dollar-denominated metal cheaper for buyers using other currencies. The dollar's weakness was partly driven by a sharp appreciation in the Japanese yen.

According to Tony Sycamore, a senior market analyst at IG Group, improved risk sentiment has also benefited gold as Middle East tensions appear to be easing, reducing upward pressure on energy prices, Treasury yields, and the dollar. Sycamore noted that while gold's dip below its 200-day moving average (around $4,526) was a short-term negative, the price remains above its late-June low of $3,942, supporting a medium-term bottom.

Focus Shifts to U.S. Jobs Data

Investors are now turning their attention to the next major economic release: the U.S. non-farm payrolls report due on Friday. This data, along with next week's inflation figures, will be crucial in shaping the Federal Reserve's policy trajectory and will likely be the next significant driver for gold prices.