Gold Prices Diverge Amid Hawkish Fed Tone and Record Chinese Demand
Gold prices are hovering around $4,330 an ounce as investors weigh the impact of a firmer dollar and expectations for further Federal Reserve tightening against record Chinese imports and sustained official-sector buying.
The Bloomberg Dollar Spot Index has edged higher after three consecutive gains, making bullion more expensive for buyers outside the US. Boston Fed President Susan Collins backed last week's quarter-point increase and warned that the risk of inflation remaining materially above 2% has grown, reinforcing expectations that September's move to a 3.75%-4% policy range may not be the last increase this year.
China has been buying gold as a hedge against geopolitical uncertainty and limited domestic investment alternatives, with imports exceeding 1,000 tonnes through August. Chinese investors have also been buying bullion, with Chinese gold ETFs adding roughly 44 tonnes through August and the People's Bank of China purchasing another 20.2 tonnes that month.