Gold slips from two-month high as focus shifts to US inflation
Despite recent gains, bullion remains about 17% below levels before the Iran war began in late February
Gold prices slipped from a two-month high as attention turned to US inflation concerns. The metal climbed above the 100-day moving average and edged up to near US$4,400 an ounce, following a brief pullback from the peak. Traders were awaiting US inflation data, which could shed light on the Federal Reserve's interest rate trajectory.
The Strait of Hormuz reopened, with Pakistan's defense minister claiming a deal between the US and Iran was imminent. However, both sides seemed to harden their positions. Oil prices surged amid the ongoing conflict in the Middle East, complicating the Fed's likelihood of raising rates, as traders remained cautious before the inflation report.
Interest rate swaps indicated a nearly equal chance of a quarter-point hike in September. The consumer price index was projected to increase by 0.1 percent in July, following a 0.4 percent decline in June. While a slowdown in price growth could ease inflation worries for the Fed, a rise in energy prices may fuel further inflationary pressure, potentially dampening gold's appeal.
Brent crude prices climbed for a sixth consecutive day. Ole Hansen, head of commodity strategy at Saxo Bank AS, noted that the macro backdrop had become more supportive, but its fragility remained. A weaker US dollar and reduced expectations for additional Fed tightening had benefited precious metals, but renewed inflation pressure, another oil price increase, or stronger US data could quickly revive rate hike expectations.
Gold briefly surpassed the US$4,000-an-ounce support level in recent weeks, driven by increased central bank purchases, notably from China. However, the metal had yet to confirm a renewed bull-market advance. Support around US$4,200 was crucial, while the major upside target was still the 200-day moving average, sitting just below US$4,500.
Spot gold rose 0.6 percent to US$4,395.80 an ounce, while silver, platinum, and palladium also gained. The Bloomberg Dollar Spot Index remained flat after ending the previous session down 0.1 percent.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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