Gold Prices Retreated from Two-Month High Amid Profit-Taking
Gold prices retreated from their recent highs to resume range-bound trading, following a rapid rally since August that saw cumulative gains exceeding 8% at one point. The pullback from the two-month high of approximately $4,450 is attributed not only to the influence of the U.S. dollar and interest rates but also significant profit-taking.
The latest U.S. inflation data provided fundamental support for gold, with the Producer Price Index (PPI) for final demand remaining flat month-on-month in July, significantly below market expectations. The year-on-year growth rate declined to 4.7% from 5.5% in June, while core CPI rose by 0.2%, suggesting that underlying price pressures persist but show no signs of re-acceleration.
However, gold did not immediately embark on a new unilateral uptrend despite the cooling inflation, as the market had already priced in some of the positive developments. Recent market data showed that gold futures closed down approximately 1.03% at $4,363.60 on August 13, ending a four-day winning streak.
The medium- to long-term fundamentals for gold remain somewhat supportive, with room for readjustment in the global interest rate trajectory and ongoing influence from U.S. dollar credibility, fiscal conditions, geopolitical risks, and central bank gold demand.