Gold Prices Retreat from $4,700 as Hawkish Tone Persists
Gold prices have retreated from their recent high of nearly $4,700 after a three-week rally, but technical analysis suggests that the bullish bias remains intact. The yellow metal rose by almost 14% during this period before correcting lower to end the week in negative territory.
The US Treasury Department's announcement of new sanctions on Iran and its entities did not have a significant impact on gold prices initially. However, as the US Dollar stabilized ahead of key data releases, XAU/USD's upside was limited.
Personal Consumption Expenditures (PCE) Price Index rose by 3.7% in July, matching June's increase and helping the USD stay resilient against its peers midweek. This led to a correction in gold prices, which dropped more than 1% on the day.
Cleveland Fed President Beth Hammack delivered a hawkish message, emphasizing that current policy is not providing restriction and that the neutral rate is on the higher side, underscoring a push for tighter policy. Similarly, Fed Chair Kevin Warsh's speech at the Jackson Hole Symposium highlighted a stronger-than-usual emphasis on the inflation mandate.