Gold Pushes Toward $4,425 as Traders Cut Odds of a September Fed Hike to 1-in-3

Gold's rally that pushed the metal above $4,400 last week hasn't run out of steam. Spot prices sat around $4,425 to $4,427 an ounce on Monday, according to fxstreet and Business Times Singapore, extending a run that's now stretched to a third straight session of gains.

The driver hasn't changed: traders are betting the Federal Reserve stays on hold in September. According to fxstreet, the CME FedWatch tool now shows roughly a 70% chance the Fed keeps rates unchanged next month, up from 48% a week earlier. Crypto Briefing put the flip side of that bet at 33% odds of a hike, down from 51.2% the prior month. The exact numbers vary slightly by source and by the hour they were pulled, but the direction is unanimous. Hike odds are collapsing.

The data behind the shift

Three reports did the damage. July nonfarm payrolls fell by 23,000 jobs against a forecast of an 80,000 gain, according to Crypto Briefing. The unemployment rate held at 4.1%. Retail sales came in weak on a monthly basis, according to fxstreet. And inflation cooperated: July CPI rose just 0.1% month-over-month, pushing the annual rate down to 3.4% from 3.5% in June, according to both Crypto Briefing and the Epoch Times.

Breitbart's Business Digest, writing from a hawkish-skeptic angle, went further into the internals. Core CPI is up 2.4% year-over-year with a three-month annualized pace of just 1.6%. The Cleveland Fed's trimmed-mean measure, a favorite gauge for filtering out noise, came in at 2.6% annually. Average hourly wages rose only 0.05% in July, annualizing to 2.3%. Breitbart's read: the case for a hike this year "seems increasingly misplaced," and the inflation hawks at the Fed are, in the outlet's words, "someone go check on the health of the Fed hawks."

Median CPI ran a bit hotter at 0.3% for the month per the Cleveland Fed, but even Breitbart concedes that's "not alarmingly so." The producer price index also moderated, rising 4.7% year-over-year in July, down from 5.5% in June, according to the Epoch Times.

Why gold cares about any of this

Gold pays no yield. When the Fed is expected to raise rates, holding bullion instead of bonds costs you more in forgone interest, so gold gets less attractive. When hike odds fall, that math flips. That's the entire mechanical reason gold is up.

There's a second channel: the dollar. The US Dollar Index fell to around 99.30 to 99.50, its lowest level since early June, according to fxstreet and Business Times Singapore. A weaker dollar makes dollar-priced gold cheaper for foreign buyers, which widens demand. Justin Lin, an analyst at Global X ETFs, told Business Times Singapore that "markets don't believe the Fed is truly hawkish in the near term," and cautioned that gold's recent bounce has been "mostly driven by technicals" and may trade "relatively flat" until the next clear catalyst.

What could still flip the script

Energy prices are the wild card every source flags. Trump has said he's not interested in extending the interim Iran deal and reiterated Iran will not be allowed a nuclear weapon, according to Business Times Singapore and fxstreet. Israel struck Lebanon over the weekend, and a senior Iranian official told Reuters that Tehran would escalate in the Strait of Hormuz if diplomacy fails, per fxstreet. Tradingeconomics noted Middle Eastern producers are reportedly moving crude through the Strait covertly despite tensions, which has so far kept oil prices from spiking and limited energy-driven inflation risk.

If oil breaks higher on an actual Hormuz disruption, inflation could reaccelerate fast, and a September pause could turn into a live debate again.