Gold Hits Two-Month High as Dollar Weakens Amid Lower Rate Hike Expectations

Gold has hit its highest level in two months, despite ongoing uncertainty regarding oil prices, inflation, and US Federal Reserve interest rates. According to Shawn Young, Chief Analyst at MEXC Research, 'the main risk is a renewed inflation shock that pushes rate expectations higher again and sends the dollar and real yields up.' Short of that, he believes this move has further to run.

The price of gold rebounded from its recent low of $3,966 to $4,400 as of August 10. Gold prices in India jumped Rs 170 to trade at Rs 1,52,230 per 10 grams on Tuesday. The US Federal Reserve's interest rate hike expectations have fallen after the July job market figures failed to meet expectations.

New labor data indicated the US economy lost 23,000 jobs in July, contrary to economists' predictions of growth. Revised figures for May and June reveal 103,000 fewer jobs were created than previously reported. Even though the unemployment rate decreased from 4.2% to 4.1%, this drop can be attributed to a decline in the number of people seeking jobs.

The reversal in rate hike expectations has worked in favor of gold, with prices increasing due to a weakening dollar, positively affecting non-yielding assets like gold. Central banks have continued to buy gold, with 51 tonnes purchased in June alone. The People's Bank of China added 15 tonnes to its gold reserves, marking its 20th consecutive month of buying.