Gold Exceeds $4,400 as Traders Focus on US Inflation Concerns

Gold prices have reached a two-month peak, exceeding $4,400 per ounce, as market participants await a crucial US inflation report that could shed light on the Federal Reserve’s perspective regarding interest-rate adjustments.

The precious metal saw an increase of up to 1% on Tuesday, building on a 3.6% gain over the past two sessions. Technical buying support emerged after the metal surpassed the 100-day moving average on Monday, signaling a rebound driven by renewed interest from dip-buyers and heightened inflows into gold-backed exchange-traded funds in China.

“Different factors concerning gold are finally coming together, suggesting that this recovery might signal the start of a new cycle,” stated Hebe Chen, an analyst at Vantage Markets in Melbourne.

“Gold is beginning to break free from the downward trend it has been trapped in since March,” she continued. “Significantly, its ability to rise alongside increasing oil prices and a stronger dollar indicates that traders are reassessing their view of gold.”

Market players are closely monitoring the upcoming US inflation figures, due to be released on Wednesday. The consumer price index is expected to rise by 0.1% in July, following a 0.4% drop the previous month, as per a Bloomberg survey of economists. Given the lackluster jobs report released on Friday, a slowdown in price growth could alleviate some inflation concerns for the Fed.

Nevertheless, the possibility of a rate hike by the US central bank—generally seen as unfavorable for gold, which does not yield interest—could increase if rising energy costs create further inflationary pressures. On Monday, US President Donald Trump announced stringent new demands on Iran, a tougher stance that reduces the likelihood of a settlement regarding the Strait of Hormuz and the ongoing conflict.

Trump also minimized the frequency and length of his talks with Fed Chairman Kevin Warsh, a subject that had sparked new speculation about possible direct influence over the central bank. The US President noted that he had only spoken to Warsh once, “briefly,” since the chairman assumed office in May.

As per the Fed’s Bank of Cleveland President Beth Hammack, several rate hikes may be necessary to achieve the central bank’s 2% inflation target. Hammack was one of three Fed officials who opposed last month’s decision to keep current borrowing rates unchanged.

Gold prices have surpassed the pivotal $4,000-an-ounce support level in recent weeks, driven by renewed interest in the precious metal linked to increased purchases from central banks. Despite these recent gains, bullion still lags about 16% behind the levels observed before the Iran conflict escalated in late February.

As of 11:50 a.m. in Singapore, spot gold was up 0.6% at $4,415.35 an ounce. Meanwhile, silver experienced a slight increase of 0.1%, reaching $65.82 an ounce. Gains were also reported in both platinum and palladium. The Bloomberg Dollar Spot Index, which tracks the US currency, edged down slightly after a 0.2% increase in the prior session.

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