Gold Rebounds Near $4,500 as Market Prices 60% Rate Hike Odds
Gold prices recovered to nearly $4,500 per ounce after dipping below $4,300. The market now prices a 60% probability of a Federal Reserve rate hike. Middle East tensions push oil above $90 per barrel.
Gold prices recovered to nearly $4,500 per ounce on Tuesday. The metal had briefly dropped below the $4,300 level earlier in the week. Silver also rose, crossing the $67 per ounce mark. These moves followed comments from Federal Reserve Governor Christopher Waller. He stated that August inflation data will heavily influence his stance on interest rates.
The 10-year US Treasury yield reached its highest level since November 2023. This spike occurred amid reignited tensions in the Middle East. Waller’s remarks helped calm the surge in yields. He indicated support for keeping rates steady if inflation shows progress toward the 2% target. The data is scheduled for release on September 11.
Market odds favor rate hike
Investors are focused on the Federal Reserve’s next meeting on September 15 and 16. CME Group’s FedWatch tool shows a 60% probability of a rate hike. This percentage increased after US nonfarm payroll numbers released on September 4 beat expectations. Strong labor data suggests the economy remains robust despite geopolitical risks.
Central banks shift gold reserves
The Dutch central bank moved 86 tonnes of gold from North America to London. This transfer occurred between March and August of this year. The bank cited increasing geopolitical unrest as the primary reason for the move. It now holds approximately 227 tonnes of gold in Canada and the US. The Netherlands joins France and other nations in rebalancing their reserves to spread risk.
Oil prices break $90 barrier
Middle East tensions pushed oil prices above $90 per barrel. Analysts note that current levels do not reflect a sudden shift in bullish sentiment. Adam Rozencwajg of Goehring & Rozencwajg points to a potential bottleneck in the refinery segment. He believes this constraint will support higher prices as risk capital re-enters the market. The conflict has created significant volatility without triggering the extreme price spikes seen in previous crises.
John Kaiser of Kaiser Research Online maintains that gold is on a sustained uptrend. He identifies $4,000 as the new base for the metal. Kaiser argues that junior mining companies are undervalued and entering a significant bull cycle. He describes the current phase as the fourth inning of a major resource rally. This perspective aligns with broader investor positioning in precious metals.
