Gold Surges to Near $4,395 Amid Dwindling Fed Hike Expectations

Gold prices surged to near $4,395 in early Asian trading hours on Monday, buoyed by dwindling expectations for a US Federal Reserve interest rate hike. The US Census Bureau reported that retail sales declined by 0.6% month-over-month in July, while the annual increase was lower than expected.

The weakening inflation data and subsequent drop in Fed hike chances have weighed on the US dollar, underpinning the price of gold. Analysts at Commerzbank note that the backdrop for bullion remains supportive, with further upside potential as long as interest rates remain low.

However, tensions in the Middle East may cap the yellow metal's gains, with Iran's deputy foreign minister urging the US to accept defeat and stop 'indulging in delusions'. Despite this, gold ETF demand is returning, reinforcing a constructive medium-term outlook for the metal.