Expectations for a Federal Reserve rate hike in September cool down, spot gold briefly climbs above $4,500

Spot gold closed at $4,491.85 per ounce on Thursday, up 2.37%. At one point, it surpassed the $4,500 mark, reaching a high of $4,510.97.

Federal Reserve Governor Christopher Waller stated that as long as inflation continues to slow, he would prefer to keep interest rates unchanged. Waller said that if inflation continues to fall toward the Fed's 2% target, he is “willing to support keeping the policy rate at its current level.” This inflation indicator was at 3.7% in July, down from 4.1% in May. This statement quickly triggered a chain reaction in financial markets. According to the CME FedWatch tool, the probability of the Federal Reserve raising rates in September plunged from around 62% before Waller’s speech to about 50%.

In addition, at 20:30 (UTC+8) on Friday, the United States will release the August non-farm payrolls report. This report will be the most important employment data ahead of the Fed’s September interest rate meeting.

Caitong Securities believes that gold’s short-term momentum has shifted to confirmation on the right side. In the medium term, the Fed is likely to keep rates unchanged this year, and the probability of the US dollar breaking above previous highs systemically is narrowing. In the long run, the more concerns there are about geopolitical stability and sovereign debt sustainability, the greater the need to focus on gold’s value as a substitute for monetary credit; this is also the underlying logic behind central bank gold purchases. Caitong Securities expects London gold to reach $4,900/oz in the third quarter, and that it is currently still in a bottom range, making it a good time to allocate from an investment perspective.

Editor: Zhu Henan