Waller’s Dovish Signal Sends Gold To Two-Week High
Gold prices surged more than 2% on Wednesday, September 2, 2026, as Federal Reserve Governor Christopher Waller signaled he would support keeping interest rates unchanged if inflation continues to cool. The rally pushed spot gold to its highest level in two weeks, with traders rapidly repricing the odds of a September rate hike.
According to CME FedWatch data, market expectations for a September rate increase tumbled to just 18% following Waller’s remarks, down from 32% a day earlier. The shift marks a dramatic reversal in sentiment that had been building toward another hike after recent hawkish comments from other Fed officials.
How Lower Treasury Yields And A Weaker Dollar Amplified Gold’s Move
The precious metal’s advance was turbocharged by a double tailwind: the 10-year Treasury yield fell 12 basis points to 4.12%, its lowest level since late August, while the U.S. dollar index dropped 0.4% against a basket of major currencies. Because gold is priced in dollars and pays no interest, a weaker dollar and lower yields make bullion more attractive to international buyers and reduce the opportunity cost of holding the metal.
Analysts noted that the move was amplified by short covering, with speculative net short positions in gold futures near a three-month high before the rally. “The market was positioned for a hawkish surprise, and Waller’s comments forced a rapid unwind,” said one precious metals strategist.
Jobs And Inflation Data Now Hold The Key To Gold’s Next Leg
Investors now turn their attention to upcoming U.S. economic data, with the August nonfarm payrolls report due Friday, September 4, and the consumer price index scheduled for release on September 16. A softer jobs number or a continued cooling in inflation would likely cement the case for a rate pause and could push gold toward its August high of $2,520 per ounce.
Conversely, a surprisingly strong jobs report or an uptick in inflation could rekindle rate hike bets and cap gold’s upside. “Gold is now hostage to the data,” said a market analyst. “Waller’s comments have opened the door, but the data will decide whether gold can sustain this momentum.”
What Could Break The Rally: Watch The September Fed Meeting
The next Federal Reserve policy meeting is scheduled for September 15-16, and traders are now pricing in just a 18% chance of a hike, down from 32% before Waller’s speech. A key level to watch is $2,500, which served as resistance earlier this week. If gold breaks above that, it could trigger further technical buying toward the psychological $2,600 level.
On the downside, a drop back below $2,450 would signal that the rally has stalled. The release of the jobs report on Friday will be the first major test, with economists expecting 150,000 new jobs added in August. Any significant deviation from that forecast could set the tone for gold’s direction into the Fed meeting.
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