Gold approaches $4,450: Weak dollar and fading rate-hike hopes provide tailwind

TL;DR

• Gold rose 0.9 percent to $4,417 per ounce on August 17, with December futures up 0.8 percent to $4,473
• Weaker U.S. retail sales and employment figures reduce market expectations of a new Fed rate hike
• Dollar weakness and lower Treasury yields give gold a double tailwind
• Analysts warn that the risk picture remains unresolved despite the rally

Gold on the offensive as rate-hike hopes fade

The gold price has taken a clear upward step in this week's trading after a series of weaker U.S. macro figures dampened the market's belief that the Federal Reserve will carry out further rate hikes. The spot price climbed 0.9 percent to $4,417 per ounce on August 17, while December futures rose 0.8 percent to $4,473, according to data from Investing.com.

The advance represents a continuation of a rebound that started from the $4,000 level, with the metal adding around 1.5 percent over two trading days.

Dollar weakness and lower yields: Gold's classic drivers

The backdrop to the rally is multifaceted. Weaker retail sales, employment, and inflation figures have collectively pushed expectations of a new Fed hike lower. That has in turn weakened the U.S. dollar and pulled Treasury yields down — two factors that historically benefit gold, which pays neither interest nor dividends.

As the opportunity cost of holding gold falls, the metal's relative attractiveness compared with interest-bearing investments increases.

Bart Melek, global head of commodity strategy at TD Securities, assesses the situation as follows: Gold appears to be pricing in a stagflationary environment featuring weaker employment and expectations that the Fed will tolerate current inflation levels, according to the Investing.com source. Craig Hemke at TF Metals Report points in the same direction, arguing that falling rate-hike expectations, cooler growth data, and a weaker dollar are collectively reigniting upside momentum across the precious metals complex.

Historical pattern: How gold reacts to Fed pivots

This is not the first time gold has performed strongly in the face of a shift in monetary policy direction. After the 2008 financial crisis, gold climbed from around $800 to nearly $1,900 in September 2011, in step with low interest rates and quantitative easing. When markets in late 2025 priced in a pivot toward rate cuts, gold rose from $3,000 to above $4,300, according to the research material.

The risk picture remains unclear

Despite the positive momentum trend, there is reason to maintain a sober perspective. Analysts note that uncertainty has not disappeared — geopolitical tensions and the possibility of inflation picking up again are keeping risk premiums elevated in the market. The Fed has not signaled any formal change of course, and the market's interpretation of the latest macro figures may prove premature.

Bitcoin, which like gold is a non-yielding asset, has shown a more mixed response. The cryptocurrency fell below $63,500 on August 12 despite lower rate-hike odds, but recovered to above $64,000 again on August 18, according to the research material. This illustrates that gold appears to be a more predictable and stable beneficiary of the "lower rates" narrative than more volatile assets.

The outlook ahead

Markets will now watch closely for upcoming U.S. macro data — particularly inflation, employment, and any statements from Fed Chair Powell — to assess whether the current rate pessimism will persist. As long as the dollar remains weak and real yields are kept low, gold has a foundation to stand on.

For Norwegian investors, it is worth noting that a weak dollar in isolation dampens gains measured in Norwegian kroner, but that the global uncertainty backdrop continues to support the role of precious metals in a diversified portfolio.