$4,400 Gold Price High Amid Fed Rate Path Uncertainty
The price of gold has reached a two-month high around $4,400 an ounce as traders weigh the US Federal Reserve's interest-rate path. The recent cooling in inflation is a positive sign for gold investors.
US data showed declines in both consumer sentiment and retail sales, easing fears of an imminent rate hike, which typically hurts non-yielding bullion like gold. However, the risk of monetary tightening remains due to rising oil prices after the US threatened to impose economic measures on Iran.
US Federal Reserve Bank of Chicago President Austan Goolsbee expressed caution, saying he is encouraged by recent inflation cooling but wants to see more in coming months to confirm it's falling back to the 2% target. The University of Michigan's preliminary August sentiment index slid to 51, while US retail sales dropped in July by the most in over a year.
Gold's recovery above $4,000 an ounce has been driven by renewed investor appetite and increased central bank purchases, particularly from China. Despite this, OCBC strategist Christopher Wong warned that consolidation risks remain around current levels.