Gold Prices Soar 11% in August as Fed Rate Hike Expectations Cool

Gold prices surged by 11.35% in August after hitting a year's low, driven by growing expectations that the Federal Reserve will hold its benchmark interest rate steady and sustained gold purchases from central banks worldwide.

The price of gold futures for December delivery closed at $4,465.42 per ounce on Wednesday on the New York Mercantile Exchange, up 0.55% from the previous session. This marks a significant rebound from the July 13 close of $4,005.

Gold prices had declined by roughly 25% from their all-time closing high of $5,318 in late January to $3,990 on June 24 before hovering around $4,000 through early August.

The recent rebound has been underpinned by expectations that the Fed will keep rates on hold, following a US jobs report released Friday that came in well below forecasts, cooling rate-hike expectations. Nonfarm payrolls fell by 23,000 last month, far short of the market consensus of an 80,000 gain.

Analysts at domestic brokerages see gold reclaiming $5,000 before year-end, citing historical patterns that point in the same direction. Looking at past cycles following all-time highs in gold, prices have on average bottomed out over eight months and recovered to around 90% of the peak within 11 to 12 months.