Gold Prices Soar Past $4,400 as Technical Buying Floods In

International gold prices broke above $4,400 per ounce on Tuesday during Asian trading, reaching a nine-week high. The surge was driven by technical buying after gold broke above its 100-day moving average, as well as increased purchases from the People's Bank of China and renewed inflows into gold ETFs.

The market is now looking to US Consumer Price Index (CPI) data due this week for guidance on the Federal Reserve's next interest rate move. If inflation continues to cool, analysts suggest gold could challenge the $4,500 level, but a hawkish stance from the Fed and elevated energy prices due to geopolitical tensions in the Middle East may pose headwinds for non-yielding gold.

Gold ETF inflows have returned, signaling a recovery in investment demand across the Asian region. Chinese gold ETFs saw significant capital inflows in July, with the People's Bank of China increasing its gold purchases by 1.8% month-over-month, marking the largest increase since October 2023.

Cleveland Federal Reserve President Beth Hammack recently stated that the Fed may need to raise interest rates multiple times to bring inflation back down to the 2% target, adding uncertainty to market expectations for an end to the tightening cycle. Market participants note that continued gold reserve accumulation by central banks around the world has provided solid downside protection for gold after it broke through the key support level of $4,000 per ounce.