Gold Retreats as US Inflation Data Sends Prices Lower

Gold prices retreated on Wednesday, pulling back from their strongest level in three months. The decline came as US inflation data revealed a higher-than-expected increase of 3.7% year over year in July. This sparked concerns that persistently high inflation will weigh on non-yielding assets like gold.

The most active Comex gold contract, December delivery, fell 1% to $4,649.10 per ounce by late morning in New York, retreating from an overnight peak of $4,730.90. Spot gold also slipped 1.4% to $4,592.53, moving away from the prior session's three-month high.

TD Securities analysts Ryan McKay and Bart Melek observed that precious metals are comfortable in their current higher range but warned that elevated energy costs and ongoing inflation risks cap near-term gains. They cautioned that the rally may be premature for another push toward all-time highs.