Gold Rebounds Above $4,400 as Weaker Dollar Eases Fed Pressure
Gold prices rose on Wednesday, rebounding above $4,400 per ounce after three consecutive sessions of losses. The recovery was supported by a weaker U.S. dollar, while investors continued to monitor escalating tensions in the Middle East and the Federal Reserve’s monetary policy outlook.
At 09:04 WIB, spot gold (XAU/USD) climbed 1.1% to $4,402.41 per ounce, while Gold Futures gained 0.2% to $4,445.85. Silver (XAG/USD) advanced 1.5% to $66.76 per ounce, while platinum (XPT/USD) rose 1.6% to $1,848.23. Meanwhile, the U.S. Dollar Index fell 0.2% to 98.70.
Weaker Dollar Gives Gold Some Relief
Gold staged a strong rebound after falling 2.6% over the previous three trading sessions, with spot bullion moving back above the $4,400 level. The recovery was supported by a weaker dollar as investors assessed whether renewed Middle East tensions could keep inflationary pressures elevated.
However, gold remains well below last week’s levels after stronger-than-expected U.S. employment data revived expectations that the Federal Reserve could raise interest rates at its September 14–15 meeting.
Markets are currently pricing in around a 60% probability of a Fed rate hike this month. Higher interest rates typically weigh on gold because the precious metal does not offer a yield. As bond yields rise, investors have greater incentives to shift toward income-generating assets.
The market’s primary focus is now on upcoming U.S. inflation data. A hotter-than-expected reading could strengthen expectations for another Fed rate hike and put renewed pressure on gold prices. Conversely, softer inflation data could give policymakers greater room to leave interest rates unchanged.
Middle East Tensions Keep Inflation Risks Elevated
Geopolitical tensions remain another key factor influencing gold prices. U.S. forces recently destroyed five Iranian oil tankers carrying crude near Kharg Island, Iran’s major oil export hub, following an attempted missile attack on an American warship.
The incident has raised concerns that the months-long conflict could escalate further and disrupt regional energy supplies.
Brent crude oil prices remain close to $100 per barrel, keeping inflation risks elevated ahead of the Fed meeting. Higher energy costs could feed through to consumer prices and make policymakers more reluctant to ease financial conditions.
ANZ analysts said investors appear to be reducing their exposure to gold ahead of the upcoming Federal Open Market Committee (FOMC) meeting. Rising energy costs have pushed bond yields higher, creating additional headwinds for bullion. However, they noted that the pressure has not stopped central banks from continuing to accumulate gold.
China’s central bank purchased around 650,000 ounces of gold in August, marking its largest monthly addition since 2023. Continued central bank purchases provide an important source of underlying demand despite the recent pressure on gold prices.
Gold has remained within a relatively narrow range around $4,400 since rebounding from the $4,000 area in July. Although the latest decline pushed prices below the 200-day moving average, long-term demand from central banks and investors continues to provide a counterbalance to short-term pressure from bond yields, oil prices, and expectations for tighter Fed policy.