Gold Rallies Above $4,400 as Central Banks Fuel Accumulation

Gold has regained its footing above $4,400 per troy ounce after a mid-week stumble. The precious metal reached $4,486.43 on Thursday, representing a 2.3 percent increase from Wednesday's close of $4,387.23.

The upswing is attributed to a softening US dollar and retreating Treasury yields, as well as signals from the Federal Reserve that inflation is cooling. Fed Chair Kevin Warsh initially expressed caution but has since been replaced by a more dovish undertone, with New York Fed President John Williams suggesting price pressures are easing.

Market participants now expect a 66 percent probability of a Fed rate cut in September, up from just 40 percent the previous week. This expectation was fueled by weak jobs data, with private employers adding only 38,000 positions in August, the lowest gain since January.

The gold market is also driven by central bank accumulation. Official institutions purchased a net 289 tonnes in the second quarter, a 62 percent increase year-over-year and the strongest April-to-June period on record. China remains the most significant buyer, with the People's Bank of China adding 20 tonnes in July to mark its 21st consecutive month of reserve accumulation.

The World Gold Council notes that global gold demand reached 1,269 tonnes in the second quarter, while mine production hit a record 965.6 tonnes for the period. Recycling supply, however, contracted by 6 percent to 326.1 tonnes.