Gold (XAU/USD) extended its gains above $4,400 during the Asian session on Thursday, building on a recovery from a nearly four-week low at $4,282. This move was supported by sliding US bond yields and a softer US Dollar, despite firming expectations for a US Federal Reserve rate hike at the September 15-16 policy meeting, with traders pricing in around a 62% chance of a hike according to CME Group's FedWatch Tool [1]. The hawkish stance was reinforced by Fed Chair Kevin Warsh's remarks and concerns over inflation risks from higher energy prices, as crude oil traded near its highest level since July 24 amid escalating tensions between the US and Iran, including recent US strikes and retaliatory actions by Tehran [1]. President Donald Trump stated readiness for further military action against Iran, maintaining geopolitical risk premiums and supporting both oil prices and the USD [1]. Technical analysis indicates gold's momentum is stabilizing, with the MACD turning positive and RSI near 49, but further gains hinge on breaking the 38.2% Fibonacci retracement at $4,438 [1].
Silver (XAG/USD) also extended its recovery, trading 0.67% higher at around $65.70 during the European session. The white metal benefited from the declining US Dollar, which was pressured by weaker-than-expected US private employment growth in August (38K jobs added vs. 47K expected and 46K prior, per ADP data) [3]. The US Dollar Index (DXY) hovered near 99.45, and a pause in the rally of US Treasury yields (10-year yield at 4.77% after peaking at 4.82%) further supported non-yielding assets like silver [3]. Technicals for silver remain constructive, with XAG/USD above its 20-day EMA and RSI at 52.85, suggesting bullish but not overstretched momentum. The August high at $71.12 is identified as key resistance [3].
The Canadian Dollar (CAD) strengthened against the US Dollar, with USD/CAD trading around 1.3830, as rising oil prices and a weaker USD provided support [2]. The oil rally was attributed to geopolitical tensions in the Middle East and efforts to secure the Strait of Hormuz, with President Trump emphasizing US control and readiness for further action against Iran [2]. Despite softer US labor data, markets still price in a roughly two-thirds probability of a Fed rate hike later this month [2]. Scotiabank analysts noted that USD/CAD faces key resistance at 1.3930, with potential for a move toward 1.40 if momentum persists, though near-term bias remains bearish below key EMAs [2].
Meanwhile, the Japanese Yen (JPY) strengthened against the US Dollar, with USD/JPY dropping to near 158.15, following signals from Bank of Japan (BoJ) officials about a possible rate hike in September [4]. BoJ Governor Kazuo Ueda indicated the central bank would debate raising rates, focusing on inflation risks, and overnight index swaps are now fully pricing in a 25 basis point hike at the upcoming meeting [4]. Scotiabank strategists highlighted that BoJ commentary has shifted expectations toward the possibility of larger-than-usual rate moves, potentially exceeding the typical 25 basis point adjustments [4]. Technical analysis shows USD/JPY remains capped under the 100-day SMA, with subdued momentum and immediate support at 157.98 [4].
Across all markets, traders are closely watching upcoming US economic indicators, particularly the Nonfarm Payrolls (NFP) report on Friday, for further cues on the Fed's policy path and potential impacts on currency and commodity markets [1][2][3][4].
CONCLUSION
Gold and silver prices advanced as the US Dollar weakened on softer labor data and falling bond yields, while geopolitical tensions and central bank policy signals added to market volatility. The Canadian Dollar and Japanese Yen both strengthened against the USD, driven by rising oil prices and expectations of a BoJ rate hike, respectively. Market participants remain focused on the upcoming US Nonfarm Payrolls report for further direction on monetary policy and asset prices.