Gold Prices Surge as Rate Hike Fears Recede

Gold prices rose this week as fading expectations for a September Federal Reserve rate hike buoyed the precious metal. Spot gold kicked off the week trading at $4,342.50 per ounce on Sunday evening and continued to move steadily higher through Monday and Tuesday ahead of the U.S. inflation data release.

The rally accelerated Wednesday after July CPI came in largely in line with expectations, easing concerns that the Federal Reserve would need to tighten policy in September and helping gold prices push to a 10-week high at $4,450.23 per ounce on Thursday.

However, gold prices pulled back sharply Thursday after softer wholesale inflation data reduced its appeal as an inflation hedge and prompted traders to take profits following the four-day rally. The metal remained under pressure into Friday due to rising oil prices and Treasury yields.

The decline proved short-lived, however, after Friday morning's U.S. retail sales report showed an unexpected 0.6% drop, reinforcing expectations that the Fed would likely leave rates unchanged at its September meeting. Gold prices recovered into the close as rate-hike expectations faded, with the precious metal finishing the week modestly higher.