Gold Consolidates Breakout Above $4,200
Gold has broken above $4,200 and is consolidating its gains. Central banks remain supportive of gold demand, while dollar weakness and improving momentum suggest the breakout may have more to run.
The July Fed meeting was dovish relative to market expectations, which helped knock some wind out of the dollar's sails. The US-Japan intervention episode also added to pressure on the dollar. A World Gold Council report showed central bank demand picked up in the June quarter, with reserve managers expecting them to continue adding to their holdings.
Gold has shrugged off elevated real yields, which historically may have been expected to deter it. The US dollar has settled into a narrow sideways range, with key inflation data due later this week that could give gold's rebound a breather.