Gold Price Pulls Back as Fed Rate Hike Expectations Ease

The price of gold has rebounded to around US$4,400 per ounce in recent months, representing a 12% swing from its year-to-date low of US$3,943 per ounce on June 30.

This increase can be attributed to several factors, including a pullback in Federal Reserve rate hike expectations. The latest non-farm payrolls data showed that the US economy lost 23,000 jobs in August, which was lower than the forecasted increase of 85,000. Additionally, the July CPI came in at 3.4%, in line with expectations.

The return of Western investment demand also contributed to the rise in gold prices, with global physically-backed gold exchange-traded funds (ETFs) attracting US$3 billion of net inflows during July. The World Gold Council reported that total holdings rose by 23 tonnes to 4,068 tonnes, driven primarily by European funds' repositioning.

The technical analysis suggests that gold may pull back after its recent rebound brought prices towards a resistance area. This resistance area coincides with the US$4,400-US$4,500 per ounce range and the 200-day simple moving average (SMA), which gold broke down in early June.