Gold nears two-month high around US$4,400 as traders weigh US Fed interest-rate path

Gold prices have climbed toward a two-month peak around US$4,400 an ounce as investors consider the path of U.S. Federal Reserve interest rates following signs of a slowing U.S. economy. Recent economic data revealed a drop in consumer sentiment and retail sales, which helped to ease concerns about an immediate interest rate increase, a factor that often hinders non-yielding assets like gold.

However, the potential for monetary tightening is still present due to the U.S. threat of economic measures against Iran. Austan Goolsbee, President of the U.S. Federal Reserve Bank of Chicago, expressed optimism about recent cooling in inflation but emphasized the need for continued reduction to reach the central bank's 2% target.

Earlier, the University of Michigan's preliminary August sentiment index declined to 51, below the median forecast of 55 from economists surveyed by Bloomberg. US retail sales fell in July for the largest year-over-year decrease in over a year. The recent rise in gold above the US$4,000 mark has been attributed to increased investor interest and central bank purchases, particularly from China.

In the past week, gold prices surpassed its 100-day moving average for the first time since April, but have since fallen below that level. While the macroeconomic environment has become more favorable, trading positions remain less supportive, and technical momentum appears stretched after the recent rebound. Strategist Christopher Wong from OCBC noted that there are still consolidation risks around the current price levels.

At 4.33 pm in New York on August 16 (4.33 am in Singapore on August 17), spot gold prices increased by 0.6% to US$4,374.24 an ounce. Silver rose by 0.3% to US$64.66 an ounce, while platinum and palladium also showed gains. The Bloomberg Dollar Spot Index, which measures the U.S. currency, experienced a 0.2% decrease.