Gold rises towards two-month high of US$4,400 as weak US retail data weighs on US dollar
Volatility continued to shroud the global energy supply outlook, showing that the risk of monetary tightening has not gone away
Gold prices rose towards a two-month high of US$4,400 on Monday, as weak US retail data pressured the US dollar, making the precious metal more affordable for buyers worldwide. The yellow metal reached near US$4,400 per ounce, up almost 1% from the previous week. Recent weak US retail sales and consumer sentiment data eased worries about an imminent interest rate hike, which usually hinders non-yielding assets like gold.
The US dollar weakened by 0.2% on Monday, making gold cheaper due to its currency pricing. The yield curve, which measures the difference between the long-term and short-term US Treasury yields, is also steepening. Nonetheless, volatility persists in the global energy supply outlook, indicating that the risk of monetary tightening remains.
Recent attacks on ships in the Strait of Hormuz and US preparations for new measures targeting Iran's economy also contributed to heightened uncertainty. A potential deal between Iran and Oman on managing the critical waterway is being discussed, though the US is not involved. Gold's ascent above the US$4,000 threshold in recent weeks has been fueled by renewed investor interest and increased central bank purchases, particularly from China.
To confirm sustained momentum, gold would need to break above US$4,400. Analyst Justin Lin from Global X ETFs suggests that the recent price bounce, driven primarily by technical factors, has incorporated most positive catalysts from the past week, potentially leading to a temporary flat trading period until another clear catalyst emerges.
The Federal Reserve's July policy meeting minutes, expected on Wednesday, will offer further insights into rate considerations. Gold was up 0.4% at US$4,391.60 an ounce in Singapore at 10:50 am. Silver increased 1.3% to US$65.54 an ounce, gaining almost 2% over the week ended August 16. Platinum and palladium also saw gains. The Bloomberg Dollar Spot Index, a measure of the US currency, declined by 0.1%.
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