Gold Takes Breather as Fed Shifts Course
The recent gold price rally has taken a breather, but analysts say it's not time to sell. Spot gold hovered near $4,435 an ounce on Friday, a modest gain from the prior session's close of $4,407.10.
One key factor is the shift in Federal Reserve expectations. According to the CME Group's FedWatch tool, just 30.6 percent of traders now price in a rate hike at the September meeting, down from 50 percent last month.
The cooling inflation data and producer prices have also contributed to this change. US consumer prices rose only 0.1 percent month-over-month in July, with the annual rate easing to 3.4 percent for the second consecutive month.
Central banks continue to support gold prices through their buying activities. China added roughly 20 tonnes of gold to its reserves in July, marking the 21st consecutive month of purchases. Globally, central banks bought an estimated 289 tonnes in the second quarter alone.