Gold Holds Steady Amid Inflation Fears and Fed Uncertainty

The gold price has been holding steady between $4,368 and $4,378 as the US dollar weakens. However, rising Brent crude prices are adding to inflation concerns and increasing pressure on the Federal Reserve to raise interest rates.

Markets are almost evenly split on whether the Fed will hike in September or not. The technical chart shows gold trading in a triangle pattern between $4,365.91 and $4,450 resistance. A break above this level could target $4,511.80, while a break below $4,365.91 would spoil the rising triangle pattern.

The biggest driver of the gold price is likely to be the CPI report on Friday, which will indicate whether inflation is increasing or decreasing. If the data suggests higher inflation, it could lead to a Fed hike and put pressure on gold. However, central banks have been buying gold in large quantities this year, providing a structural floor for the price.

The World Gold Council notes that while short-term yields remain bearish for gold due to Fed-related policies, longer-term yields are likely to become bullish as concerns about inflation, deficits, and growing debts create potential for gold appreciation. Central banks' purchasing decisions are based on multiple factors, including the outlook for inflation and central bank actions.