Gold Nears $4,400 as Dollar Weakness Supports XAU/USD

Gold nears $4,400 as a weaker dollar cuts Fed hike bets to 30%, while Hormuz tensions and central-bank buying support XAU/USD and shape the outlook.

Gold moved higher Monday as a weaker U.S. dollar and softer American economic data reduced expectations for another Federal Reserve rate increase. Spot gold rose about 0.4% to $4,391 an ounce, while the Dollar Index fell 0.2%. Markets are now pricing roughly a 30% probability of a September Fed hike, down from about 47% a month earlier.

Softer Data Shift Fed Rate Bets

Recent U.S. data have changed the interest-rate outlook. Retail sales weakened and consumer sentiment deteriorated, adding to evidence that household demand is losing momentum. July consumer prices also increased only 0.1% month over month, helping reduce concerns that energy costs were creating a broad inflation acceleration.

For gold, the rate outlook is important because bullion does not generate interest income. When investors expect borrowing costs to remain high or rise further, Treasury securities can become more competitive. When rate expectations decline, the opportunity cost of holding gold falls. The Federal Reserve kept its benchmark rate at 3.50%-3.75% at its July 28-29 meeting. Three regional Fed presidents—Beth Hammack, Neel Kashkari and Lorie Logan—dissented in favor of a 25-basis-point increase, producing a 9-3 vote.

Investors will receive the meeting minutes on Wednesday, Aug. 19. The document could provide additional evidence about the division inside the Federal Open Market Committee and the conditions that could trigger a September rate increase.

Hormuz Risk Keeps Oil in Focus

Gold is also receiving support from geopolitical uncertainty surrounding energy supplies. Tensions around the Strait of Hormuz remain important because the waterway is a major route for global oil shipments. Brent crude was around $88.67 a barrel Monday, while U.S. crude was slightly lower. Analysts expect regional instability to keep oil markets sensitive to developments involving Iran and the Gulf.

A sustained increase in oil prices could complicate the Fed’s policy decision. Higher energy costs can raise headline inflation and delay monetary easing, creating opposing forces for gold: geopolitical risk can increase demand for bullion, while higher inflation can keep interest rates elevated.

Key factors for gold traders this week include:

• The Fed’s July meeting minutes on Aug. 19.
• September rate-hike expectations near 30%.
• Gold holding close to the $4,400 level.
• Oil prices and developments around the Strait of Hormuz.

Central Banks Add Long-Term Support

Central-bank demand provides another layer of support for gold. World Gold Council data show central banks and other institutions added about 243.7 tonnes in the first quarter of 2026, broadly matching the widely reported 244-tonne figure. Quarterly demand increased 17% from the previous quarter.

China has remained an important buyer, while broader reserve diversification has helped strengthen structural demand for bullion. That demand is less dependent on short-term U.S. interest-rate movements and can provide support when prices retreat. Gold is now trading close to a major $4,400 threshold after rising to about $4,435 earlier in August, its highest level since June 5.

The immediate direction will depend heavily on the Fed minutes and incoming inflation and labor data. If rate-hike expectations continue to fall while geopolitical risks persist, gold could challenge recent highs. A stronger dollar or evidence that the Fed remains prepared to tighten policy would create a clearer obstacle near $4,400.