Could Golds 0.4% Rise Be the Start of a Stronger Rally

Highlights:

• Spot gold rose 0.4% to US $4,188.93 per ounce at the time of writing, putting it on track for a 4.8% weekly gain as a weaker US dollar boosted demand.
• Hawkish Federal Reserve comments capped further upside, with rate-cut expectations for next month falling from 64% to 51%, pressuring non-yielding gold.
• The US government’s return to operation after a 43-day shutdown, along with lingering economic uncertainty, helped sustain investors’ interest in gold as a safe-haven asset.

Gold edges higher amid softer dollar

At the time of writing, spot gold has climbed about 0.4 per cent to US $4,188.93 per ounce, as traders react to a weaker US dollar. Bullion is also positioned for weekly gains — up around 4.8 per cent this week. The dollar index is heading toward a second consecutive weekly drop, making gold more attractive for holders of other currencies.

Rate-cut hopes dampened by hawkish Fed talk

Despite the supportive backdrop, gold’s upside is being capped by hawkish commentary from officials at the Federal Reserve, who have signalled caution on a further interest-rate cut. Markets now place only a 51 per cent chance of a quarter-point cut next month — down from 64 per cent previously.

Because gold doesn’t offer yield, its appeal is strongest when interest rates are low and inflation or uncertainty is elevated — the current mix is creating tension between bullish and bearish signals.

What to watch going forward

Key triggers in upcoming days include further US economic data and any fresh comments from Fed officials. A dovish surprise could ignite further gains for gold; conversely, any firm signal that rates will stay elevated could weigh on bullion.

It’s also worth noting that the US government’s restart following a record 43-day shutdown had shaken market sentiment earlier, prompting investors to lean more heavily toward gold as a safe-haven option.

In short: at the time of writing, gold is rising modestly in response to currency and safe-haven flows, but the outlook remains finely balanced as rate-cut expectations wobble and traders await clearer signals from central banks.

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