Gold Holds Near $4,500 as Fed's Waller Signals Potential Rate Pause

Gold prices held steady near the $4,500 an ounce level on Thursday, maintaining gains from an almost 2% overnight surge after comments from a key Federal Reserve official softened expectations for another interest rate hike. The move was supported by a weaker U.S. dollar and a pullback in Treasury yields as investors reassessed the central bank's policy path.

Waller's Comments Shift Rate Expectations

The primary catalyst for gold's rebound was commentary from Federal Reserve Governor Christopher Waller. Speaking on Wednesday, Waller signaled he could support keeping interest rates unchanged at the Fed's upcoming September 15-16 meeting, provided that incoming data confirms a continued easing of inflation.

Waller emphasized that August inflation figures would be a critical factor in his decision, according to a report from Investing.com. Following his remarks, market pricing for a September rate hike fell from a probability of roughly 70% earlier in the week to approximately even odds. Lower interest rates typically benefit gold, a non-yielding asset, by reducing the opportunity cost of holding it compared to interest-bearing assets like bonds.

Market Reaction and Key Data Ahead

In response to the shifting rate outlook, financial markets saw broad adjustments. The U.S. Dollar Index was little changed at 98.98, while a weaker greenback generally makes dollar-denominated gold more affordable for international buyers.

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As of 21:03 ET (01:03 GMT), key precious metals prices were:

• Spot gold (XAU/USD) was up 0.1% at $4,479.58 an ounce.
• Gold futures fell 0.3% to $4,525.49 an ounce.
• Spot silver (XAG/USD) gained 0.1% to $67.05 an ounce.

Investors are now turning their attention to Friday's U.S. nonfarm payrolls report and next week's inflation data. These releases will be crucial in determining whether the cooling economic trend Waller cited is continuing, thereby influencing the Fed's next move.

Technical Picture and Context

The recent price recovery follows a sharp selloff earlier in the week that saw bullion drop to a nearly four-week low of around $4,282. Tony Sycamore, a senior market analyst at IG cited by Investing.com, noted that while gold's break below its 200-day moving average of around $4,526 caused short-term technical damage, his medium-term view is that the metal has formed a solid base near its late June low of $3,942.