Gold pulls back from seven-week high as bulls struggle to find acceptance above $4,300

Gold experienced a pullback from its seven-week high as investors struggled to accept prices above $4,300. This occurred despite numerous US Federal Reserve officials cautioning that persistent inflation could prompt further interest rate hikes. Fed Governor Lisa Cook expressed her readiness to raise interest rates if inflation does not subside, warning that the central bank cannot afford to wait indefinitely.

Meanwhile, San Francisco Fed President Mary Daly stated that more data was needed prior to the September meeting to determine whether inflation is temporary or permanent. Markets were still pricing around an 80% chance of a rate hike by the end of the year, fueled by worries over supply disruptions. Recent tensions between Iran and the US, including Houthi missile attacks on Saudi oil tankers, have added to the uncertainty.

However, hopes for a US-Iran peace deal and the reopening of the Strait of Hormuz have helped keep oil prices depressed near multi-week lows. Employment data from ADP and the ISM Services PMI also impacted market sentiment, with the latter falling short of expectations. As a result, the probability of a September Fed rate hike decreased to roughly 55%.

Traders may now choose to wait for the upcoming Nonfarm Payrolls report, scheduled for Friday, to gain further insight into the Fed's future policy trajectory.