Gold is on track to record its first monthly gain since February as the precious metal largely held the pivotal US$4,000 ($5,700) support level throughout July.
Spot prices maintained around US$4,050 an ounce on the last trading day, despite having fallen as much as 2% earlier in the session, for a narrow monthly gain of 0.4%.
Driving gold’s daily decline was a rebound in the US dollar, which reduces the appeal of greenback-denominated assets like bullion.
The dollar index is coming off its worst day since January 2023 following a sharp selloff triggered by the Federal Open Market Committee’s decision to hold interest rates steady.
That decision benefitted gold, taking prices briefly back above US$4,100 an ounce and contributing to the monthly rise.
Moreover, the latest US data also showed softer inflation numbers in June, easing some concerns over Fed rate hikes. For months, the prospect of higher interest stoked by surging energy prices from the US-Iran war has held gold down, sending its prices down by almost 25%.
Despite weaker gold prices, demand for the metal largely held up throughout the second quarter, according to the latest data from the World Gold Council.
Fed Chairman Kevin Warsh, on this week’s rate decision, said “if inflation continues to be elevated through the forecast period, interest rates could well be part of that solution, but I wouldn’t say it’s in isolation.”
Helen Amos, an analyst at BMO Capital Markets, told Bloomberg earlier that Warsh’s messaging “is that inflation is not alarming, outside of the energy price effect,” adding that the “market’s assessment of inflation might be past its peak.”
Looking ahead, investors will monitor developments from the Jackson Hole Economic Policy Symposium held in late August to gauge where gold is headed next.
Write to Jackson Chen at Mining.com.au
Image: iStock
