US Inflation Rate and Iran Tensions Put Pressure on Gold Prices
The US inflation rate cooled slightly in July, but still remains a concern for Federal Reserve policymakers. The annualized rate was 3.4% in July, down from 3.5% in June. Stripping out volatile items like energy and food, the core inflation rate rose by 0.2% every month and 2.5% year-on-year.
The slight drop in inflation may have a positive impact on gold prices, which have been under pressure due to higher interest rates. However, the Federal Reserve may still opt for a quarter-point rate hike in September, according to CME FedWatch, which puts the probability at 44%.
Meanwhile, tensions between the US and Iran continue to escalate. A top adviser to the commander of Iran's Islamic Revolutionary Guard Corps has stated that Iran could prolong the war with the US until President Donald Trump is out of office. The conflict has resulted in higher oil prices, which have risen by around 1% before paring gains to trade 0.2% higher at $89.12 a barrel for Brent crude.
Gold prices are also under pressure due to the ongoing conflict and potential interest rate hikes. Technical analysis suggests that gold futures could experience a surge in exhaustion if they close below the immediate psychological support at $4,444.