Gold recovers as hawkish repricing peaks, dollar pulls back
Gold rebounded above $4,000 as the hawkish repricing of Fed rate expectations peaked, with real yields and the dollar pulling back, while markets await US jobs and CPI data for the next move.
Gold prices have regained some ground after briefly dipping below the $4,000 level on Wednesday, as the aggressive repricing of Federal Reserve rate expectations appears to have reached a near-term peak. The pullback in real yields and the US dollar provided support for the precious metal, allowing it to recover from the earlier losses.
The recent hawkish shift in market pricing followed the Fed's latest policy decision, but the momentum seems to have stalled. Fed Governor Williams reiterated that the current policy stance is well-positioned, and the core PCE inflation data came in line with expectations, reducing the urgency for further tightening. The total tightening priced in by year-end has fallen from a peak of 42 basis points after the FOMC meeting to 32 bps now, signaling that the market sees limited scope for additional rate hikes. This shift in rate expectations has weighed on the dollar and real yields, both of which are key drivers for gold. Live FX prices and charts on NowPrice show how the dollar's pullback is supporting gold and other commodities in real time.
Looking ahead, the next leg for gold and the dollar will depend on upcoming US data, particularly the nonfarm payrolls report and the consumer price index. Upside surprises in these releases could reignite hawkish bets and pressure gold, while softer data may reinforce the view that the peak in rates has passed. Traders will also monitor Fed speakers for any shift in tone. For now, the market appears to be in a wait-and-see mode, with gold finding a floor near $4,000 as the repricing cycle takes a breather.