Gold Finds Footing at $4,400 as Rate Hike Odds Fall
Gold has found its footing at $4,400 and is benefiting from a shift in rate expectations. The technical picture remains one of consolidation rather than capitulation, while the fundamental backdrop is improving for gold.
The CME FedWatch Tool now prices a September rate hike at just 32.5%, down from previous odds. This repricing has helped bullion rally around 10% through August and reach a two-month high above $4,449 before consolidating near current levels.
U.S. gold demand fell to just 8 tonnes in Q2, under severe pressure due to continued outflows from U.S.-listed physically backed gold ETFs, which saw holdings fall by 40 tonnes in June alone.
However, this weakness was concentrated and not continuous, with the two discrete liquidation episodes giving a false reading of consistent mass liquidation. The World Gold Council reported that excluding these outsized outflows, U.S. gold-backed ETFs would have recorded 65 tonnes of net inflows in H1.
Critically, global physically backed gold ETFs added 23 tonnes in July, lifting holdings to 4,068 tonnes and pushing assets under management to roughly $530 billion.