Gold Prices Retreat Amid Cautious Investor Sentiment
Gold prices retreated from earlier gains as investors grew cautious after a strong August rally. The precious metal had reached its highest level since May 14 at $4,697 earlier this week and is still up around 13% so far in August.
The decline comes as traders locked in profits near recent highs, following Wednesday's US Personal Consumption Expenditures (PCE) Price Index data showing sticky price pressures above the Federal Reserve's 2% target. The resulting modest recovery of the US Dollar reduced Gold's appeal as a hedge against inflation, leading to a loss of around 1.40% on Wednesday.
However, recent Consumer Price Index (CPI) and Producer Price Index (PPI) data suggest inflation is no longer accelerating sharply, reducing the chances of an immediate Fed rate hike and limiting the downside in Gold. Markets currently see a near 62% chance that the central bank will keep borrowing costs unchanged in September, according to the CME FedWatch Tool.