FX.co ★ Gold Holds Gains as Dollar Weakens

Gold hovered around $4,100 an ounce on Friday after advancing for two consecutive sessions, supported by a sharp decline in the US dollar amid renewed speculation that Japan intervened in the currency market to bolster the yen. The metal also received a boost this week after the Federal Reserve left interest rates unchanged, even as inflationary pressures intensified following a resurgence of conflict in the Middle East. Still, expectations of tighter monetary policy capped further upside, with futures markets now assigning roughly a 63% probability to a Fed rate hike in September. At the same time, the US military carried out new strikes on Iranian targets in response to Tehran’s attacks on US assets across the region, further dimming prospects for any near-term diplomatic breakthrough. Gold remains on track to gain more than 2% this month, positioning it for its first monthly advance in five months.