Gold Holds Above One-Week Low Ahead of US Inflation Data

• The precious metal is on the verge of posting a third consecutive weekly loss • The US dollar continues to recover against a basket of global currencies • The 10-year US Treasury yield approaches the 5% threshold • Markets await crucial clues regarding the path of US interest rates

The yield is strongly approaching the 5% barrier for the first time since October 2023, driven by the current massive surge in global oil prices, which is expected to intensify inflationary pressures on Federal Reserve policymakers and significantly bolster the odds of US interest rate hikes this year.

• Following the aforementioned data, according to the CME Group's FedWatch tool: market pricing for the probability of the Federal Reserve keeping interest rates unchanged at the September meeting dropped from 40% to 28%, while the probability of a 25-basis-point rate hike climbed from 60% to 72%.

Gold Performance Outlook: We at "FX News Today" expect that if US inflation data comes in softer than market expectations, expectations for a Federal Reserve rate hike in September will diminish, halting the dollar's recovery and the rise in US yields, and fueling a rally in gold and other precious metals.

• US dollar extends recovery against a basket of currencies • 10-year US Treasury yield nears the 5% barrier • Markets await key US inflation data • ECB raises interest rates to the highest level since March 2025 • Christine Lagarde warns of ongoing Middle East conflict • Reports: ECB considers raising interest rates for a third time in October

• US dollar extends recovery against a basket of currencies • 10-year US Treasury yield nears the 5% barrier • Markets await key US inflation data • Bank of Japan prepares to raise interest rates for the second time this year • Bank of Japan to offer limited signals regarding the terminal interest rate target • Unwinding of interest rate carry trades intensifies