Gold Drops Toward US$4,300; Profit-Taking Weighs on Prices
Gold prices weakened for a second consecutive day during Friday's trading (August 14) as profit-taking halted a rally previously driven by data showing more contained US inflation. Gold fell approximately 0.9% to near US$4,310 per troy ounce, extending a 1.3% correction from the previous session.
Selling pressure emerged after gold hit a 10-week high on Thursday. While cooler US CPI and PPI data had previously dampened expectations for Federal Reserve interest rate hikes, that positive sentiment was deemed to have already been largely priced into gold's earlier gains.
Money markets now estimate the probability of a Fed rate hike in September at only about one-third. Investors will next focus on US labor data and remarks by Fed Chair Kevin Warsh at the Jackson Hole symposium in late August for clues regarding the direction of monetary policy.
Although a lower probability of a Fed hike generally supports gold, the prospect of interest rates remaining high for an extended period poses a risk. Attractive bond yields can dampen interest in gold, as the precious metal does not generate interest income.
On the geopolitical front, Middle East tensions remain a factor to watch. A fresh escalation in the US-Iran conflict could drive up energy prices and inflation, while central bank buying—particularly from China—continues to provide fundamental support for gold in the medium term.
Newsmaker Analysis: The current correction toward the US$4,300 level reflects profit-taking following a strong rally rather than a shift in fundamentals to a bearish outlook. However, technical momentum is beginning to wane after gold slipped back below its 100-day moving average. If the US$4,300 level fails to hold, the correction could deepen; conversely, a move back above US$4,400 would signal a recovery in bullish momentum. (asd)
Source: Newsmaker.id
