Gold nears $4,400 as traders weigh Fed interest-rate path

Gold edged closer to $4,400 an ounce as investors assessed the Federal Reserve's interest-rate trajectory following signs of a cooling economy. Recent US data revealed declines in consumer sentiment and retail sales, alleviating concerns of an imminent interest rate increase, which typically hampers non-yielding assets like gold.

However, the possibility of monetary tightening persists amid a surge in oil prices following US threats to impose economic sanctions on Iran. Austan Goolsbee, President of the Federal Reserve Bank of Chicago, expressed optimism about recent inflation deceleration but emphasized the need for sustained decline to reach the central bank's 2% target.

Earlier, the University of Michigan's preliminary August sentiment index dropped to 51, slightly below the median estimate of 55 from a Bloomberg survey of economists. Retail sales in July plummeted to their highest decline in over a year. The recent rebound in gold's price has been fueled by increased investor interest and central bank purchases, particularly from China.

Gold's ascent above the $4,000 mark in recent weeks has been buoyed by a more favorable macro environment, despite technical indicators becoming stretched after the recent uptick. Christopher Wong, a strategist at Oversea-Chinese Banking Corp., noted that while the macro conditions have improved, market positioning remains unfavorable and technical momentum may face challenges after the recent surge.

Spot gold increased 0.6% to $4,374.24 an ounce at 4:33 p.m. in New York, while silver rose 0.3% to $64.66 an ounce. Platinum and palladium also experienced gains. The Bloomberg Dollar Spot Index, which measures the value of the US currency, declined 0.2%.