Gold prices (XAU/USD) climbed to nearly $4,165 during the early Asian session on Wednesday, rebounding as long-dated US Treasury yields retreated from multi-decade highs and oil prices declined. The benchmark 10-year Treasury yield fell more than 2 basis points to 5.286% after reaching its highest level since April 2002 in the previous session, while the 30-year yield dropped to 5.661% and the 2-year yield decreased over 3 basis points to 4.798% [1].
The easing of bond yields and lower oil prices alleviated concerns about inflation and the likelihood of further US Federal Reserve rate hikes, providing support for gold. According to the CME FedWatch tool, traders are now pricing in approximately 79.5% odds that the Fed will keep rates unchanged at its October policy meeting [1].
Analysts at Commerzbank observed that gold has 'stabilised for the time being at around USD 4,150 per troy ounce,' attributing this to reduced concerns about rapid US interest rate increases and steady ETF investor positioning. While ETF investors have not significantly increased their exposure, they have also not reduced it, which has helped underpin gold prices [1].
Looking ahead, consultancy firm Metal Focus is optimistic, forecasting new record gold prices for 2027 based on expectations of rising investor interest in the medium term [1]. However, Federal Reserve official Schmid delivered a notably hawkish speech, emphasizing persistent inflation risks and highlighting AI as a major inflation driver. Schmid stressed that the Fed's credibility is at stake and indicated a bias toward maintaining tight policy, which could support yields and weigh on the dollar. The FXS Fed Sentiment Index rose by 0.34 points to 137.91, signaling that the Fed's communication remains firmly hawkish [1].
CONCLUSION
Gold's recent rise above $4,150 is supported by easing Treasury yields and reduced inflation concerns, with traders largely expecting the Fed to hold rates steady in October. However, hawkish Fed commentary and persistent inflation risks suggest that monetary policy may remain tight, potentially influencing future gold price movements.