Gold Rises as Central Banks Set Record Hoarding Amid Fed Uncertainty

Gold prices climbed 1.4 percent to $4,448.18 an ounce on Thursday as central banks continued to accumulate record amounts of gold. The second quarter saw a net purchase of 289 tonnes by central banks worldwide, the highest amount ever recorded for that period.

The Dutch central bank added to this trend by moving 86 tonnes of bullion from New York and Ottawa to London over the past six months. This decision was made to ensure the reserves can be quickly deployed in case of a crisis. China's central bank also bought an additional 20 tonnes in July, lifting its reserves to a record 2,377.5 tonnes.

The Federal Reserve's next move remains uncertain, with market pricing for a quarter-point rate hike at the September meeting easing to around 64 percent after Fed Chair Kevin Warsh's hawkish remarks on inflation. However, New York Fed President John Williams has suggested that inflation is cooling, which may influence the Fed's decision.

The escalating tension between Washington and Tehran also had an impact on gold prices. Initially, it caused a spike in oil prices due to concerns about inflation and supply disruptions. But after US President Trump signaled that the attacks would be short-lived, oil prices fell, and gold benefited from reduced inflation anxiety.