Gold Retreats as Rate Hike Expectations Fading
Gold prices retreated on Friday as profit-taking gained momentum after reaching a two-month peak. The decline was fueled by fading expectations of U.S. interest rate hikes, which had driven the rally in gold. According to Saxo Bank analyst Ole Hansen, 'gold trades lower for a second day as profit-taking sets in following a strong run of gains.'
The spot price of gold eased 0.1% to $4,344.24 per ounce by 0851 GMT, while U.S. gold futures for December delivery fell 0.4% to $4,400.40 per ounce. This decline erased most of the gains made earlier in the week.
The recent rally in gold prices was driven by tame U.S. inflation data and reduced expectations for further rate hikes. The CME FedWatch Tool indicates that traders are now pricing only a 33% chance of a rate hike in September, down from about 44% last week.