Gold Hits Highest Since June as Dollar Faces Fresh Selling, Fed Rate Hike Bets Fade

**Lead:** Spot gold climbed to its highest level since June during Asian trading on Friday, buoyed by easing US inflation pressures and diminished expectations of Federal Reserve rate hikes, with technical support above the 200-day simple moving average.

**Fading Rate Hike Bets Fuel Gold Rally**

The latest US inflation report showed signs of cooling price pressures, reversing aggressive market bets on imminent Fed policy tightening. Traders reassessed the rate path, weakening the dollar's relative appeal and opening upside for non-yielding gold. According to Nikos Tzabouras, senior market analyst at Jefferies' Tradu.com, market sentiment is recovering from earlier policy-tightening anxieties, with the repricing of inflation expectations being the primary driver of gold's advance.

**Dollar Weakness Provides Key Support**

The decline in Fed rate hike probabilities has left the dollar index hovering near three-month lows, directly fueling bullish momentum in gold. The negative correlation between the dollar and gold was fully evident in this move, as funds rotated out of US Treasuries and dollar-denominated assets, with some allocation demand shifting toward precious metals. Although market sentiment was briefly unsettled by expectations of easing tensions in the Strait of Hormuz, the diplomatic breakthrough in restoring energy shipping has yet to fully materialize, leaving lingering inflation concerns that preserve a premium for gold.

**Market Focus and Risk Warnings Ahead**

Gold is trading around $4,546, and having successfully held above the 200-day moving average, short-term momentum favors buyers. However, markets should remain vigilant against potential reversals driven by data. If key indicators such as US employment surprise to the upside again, rate hike expectations could resurface, constraining gold's rebound potential. Overall, the current bullish setup for gold is highly dependent on the macro narrative—that cooling inflation will keep the Fed patient—and any break in this chain of logic could trigger corrective pressure.