Gold Jumps Over 3% as Dovish Fed Outlook Weakens Dollar

Gold rose more than 3 percent on Wednesday as the dollar fell sharply on expectations the Federal Reserve will ease monetary policy, lifting the metal from recent lows.

The rally followed a US Treasury announcement that weighed on yields and the dollar, according to market reports. Traders have grown more confident the Fed, now led by Chair Kevin Warsh, will cut rates after holding them steady at its July meeting.

The gain reverses part of a weak stretch for bullion, which fell 14 percent in the second quarter and was down 3 percent year-to-date as of mid-June, according to Argus Research. A softer dollar makes dollar-denominated gold cheaper for overseas buyers, while lower Treasury yields reduce the opportunity cost of holding the non-interest-bearing metal.

The dovish outlook could extend the rally if the Fed signals further easing at its September meeting. A sustained move higher would also lift precious metals miners and exchange-traded funds such as SPDR Gold Shares, which track the metal's price.

The dollar's slide came as investors reassessed the path of US monetary policy. Warsh, who took over from Jerome Powell in May, has faced pressure from the White House to lower rates even as inflation has run above the Fed's 2 percent target. The central bank held its policy rate steady at the July Federal Open Market Committee meeting, but a weak jobs report has strengthened the case for a cut. July nonfarm payrolls fell by 23,000, badly missing the consensus forecast for 80,000 new jobs, according to Argus Research.

Gold's move on Wednesday marks a sharp reversal from earlier in the year, when the metal was pressured by a stronger dollar and rising real yields. The second-quarter decline of 14 percent was the steepest quarterly drop for bullion in years, as investors favored risk assets and the AI-driven rally in equities. The dollar index, which tracks the greenback against a basket of major currencies, had strengthened through the first half of 2026 before turning lower in recent weeks.

The weaker dollar also supports other dollar-denominated commodities and emerging-market assets, which tend to benefit when the greenback softens. For gold specifically, the combination of a dovish Fed and persistent geopolitical uncertainty has historically supported safe-haven demand. Silver and other precious metals typically follow gold higher in such moves, though their gains can be more volatile.

Traders will watch the Fed's September meeting for signals on the pace of easing. If the central bank delivers a rate cut, gold could build on Wednesday's gains; if it holds steady, the metal may give back some of the move. The next inflation reading, due before the meeting, will also shape expectations for how quickly Warsh can move toward lower rates.

This article is for informational purposes only and does not constitute investment advice.