Key Highlights

• Gold rose 2% to around USD 4,473 per ounce Thursday, rebounding from its lowest level since late August.

• The rally followed comments from Fed Governor Christopher Waller suggesting he would support holding rates steady if Inflation continues cooling.

• FedWatch data showed the odds of a September rate hike falling to 54.6%, down from roughly 66% earlier in the week.

• Silver, platinum and palladium also gained, while oil extended a multi-day rally on renewed Iran-related Supply concerns.

Waller's Remarks Reverse a Recent Slide in Bullion

Gold rose 2% Thursday, extending gains as traders scaled back expectations for a September rate hike following comments from Federal Reserve Governor Christopher Waller. Spot gold climbed to around USD 4,473 per ounce after touching its highest level since late August earlier in the session, while December gold futures rose more than 2% to above USD 4,517 per ounce. The move followed a sharp slide earlier in the week, when gold touched its lowest level in more than three weeks amid a hawkish shift in rate expectations tied to Fed Chair Kevin Warsh's remarks at Jackson Hole. Waller said Thursday that if upcoming inflation data confirms recent progress, he would be inclined to support keeping interest rates unchanged at the Fed's next policy meeting. Following the remarks, market-implied odds of a rate hike at the September 15-16 meeting fell to 54.6%, down sharply from roughly 66% earlier in the week, according to CME Group's FedWatch tool. One senior market strategist said traders increasingly appear to be positioning for a less aggressive Fed, with growing acceptance that the Central Bank could deliver one hike this year but little more beyond that.

Lower Yields and a Weaker Dollar Support the Rally

Supporting the move in bullion, Treasury yields edged lower Thursday, reducing the Opportunity cost of holding non-yielding gold, while the U.S. dollar also weakened, making dollar-priced gold more affordable for buyers using other currencies. Although gold is often viewed as an inflation hedge, higher interest rates typically diminish the appeal of non-yielding Assets like bullion, meaning Thursday's dovish repricing of rate expectations directly supported the rally. Investors are now awaiting Friday's closely watched U.S. non-farm payrolls report, followed by August inflation data due the following week, both of which will Factor heavily into the Fed's eventual decision. Silver gained 1.7% to around USD 66.41 an ounce, platinum rose 2% to roughly USD 1,795.67, and palladium climbed 2.6% to about USD 1,380.66, reflecting broad strength across the precious metals complex.

Oil's Rally Continues Alongside Gold's Gains

Even as gold rallied on dovish rate expectations, oil prices extended a fourth consecutive day of gains, touching six-week highs earlier in the session as renewed U.S. strikes on Iran and fresh Israeli threats against Tehran revived concerns about disruption to Middle East energy supplies. The simultaneous rally in both gold and oil reflects distinct drivers, dovish Fed repricing supporting bullion, and geopolitical risk supporting crude, rather than a single unified market narrative.

Conclusion

Thursday's rally illustrates how directly gold's near-term trajectory remains tied to shifting Fed rate expectations, even against a backdrop of ongoing geopolitical tension that might otherwise be expected to dominate safe-haven demand. Whether gold's gains hold through Friday's payrolls report and next week's inflation data will likely depend on whether the disinflationary signals Waller cited are confirmed or contradicted by the incoming data.