Gold rebounds to near $4,050 as softer Fed stance supports bullion

Gold rose to near $4,045 per ounce in early Asian trading Thursday, recovering from a seven-month low as the Federal Reserve struck a less hawkish tone.

Fed Chair Kevin Warsh said inflation expectations had moderated over the past month and reiterated the central bank's commitment to restoring price stability, offering no signal that a July rate hike is imminent, according to his remarks at the European Central Bank's annual forum in Sintra, Portugal.

The comments weighed on the US Dollar and pushed bond yields lower, reducing the opportunity cost of holding non-yielding bullion. ADP data released Wednesday showed US private payrolls rose by 98,000 in June, below the 118,000 consensus estimate and the prior month's 122,000 gain, according to the ADP National Employment Report. The miss added to expectations that the labor market is cooling, which could reinforce the Fed's patient stance.

Gold last traded above $4,100 in mid-June before sliding to its lowest since November 2025. The yellow metal remains about 8% below its all-time high near $4,400 set in April, when trade war fears and geopolitical uncertainty drove a record rally. The US Bureau of Labor Statistics' June nonfarm payrolls report, due Thursday, is the next major catalyst for direction. Economists expect payrolls to have risen by about 160,000, according to a Bloomberg survey.

Fed's Dovish Lean Supports Gold

Krishna Guha at Evercore said Warsh's comments "provided no fuel for speculation on a near-term July rate hike" and suggested the new Fed chair "does not currently see cause for an immediate hike." Markets have priced around 45 basis points of tightening by year-end, according to swap data. A softer labor market reading could further reduce rate hike expectations and provide additional support for gold, which thrives in a low-rate environment.

Geopolitical Tailwinds Add to Safe-Haven Bid

Qatar said Wednesday that US and Iranian negotiators made "positive progress" on issues tied to the memorandum of understanding, with both sides agreeing to continue discussions. US Vice President JD Vance said talks in Doha are "going well" and that discussions about the nuclear issue would start soon. Any de-escalation in Middle East tensions could reduce safe-haven demand, but the broader geopolitical backdrop remains supportive for gold prices given ongoing trade uncertainties between the US and China.

Gold's Inverse Correlation With the Dollar

Gold has an inverse relationship with the US Dollar and US Treasuries, both major reserve and safe-haven assets. When the Dollar weakens, gold tends to rise, enabling investors and central banks to diversify holdings during turbulent periods. Central banks added 1,136 tonnes of gold worth about $70 billion to their reserves in 2022, the highest yearly purchase on record, according to the World Gold Council. Emerging-market central banks, particularly in China, India and Turkey, have continued to increase their gold reserves.

This article is for informational purposes only and does not constitute investment advice.