Gold Prices Rebound by Nearly 9% as Bullion Gains Favor with Investors

Gold prices have rebounded by nearly 9% in August to around $4,400 an ounce, a move that suggests bullion is gaining favor with institutional investors and central banks. This recovery follows the sharp decline in gold prices earlier this year due to the U.S.-Israeli war with Iran, which saw prices fall from a record high of $5,595 per ounce in January to below $4,000 in June.

The outbreak of the war led to investors seeking liquidity and some central banks tapping reserves to support domestic economies amid an oil price rally. According to James Steel, chief precious metals analyst at HSBC, 'It feels as though the handbrake has finally been released from gold.'

Gold prices have broken above two key resistance levels this month, helped by lower oil prices and softer U.S. inflation data that reduced expectations for future rate hikes. If the situation in the Middle East does not erupt again and oil prices spike, it seems that gold's path of least resistance is higher.