Gold price hits two-month high as global market rally continues
Investors are now watching upcoming US inflation data and expectations about interest rates.
Gold rally gains fresh momentum
According to Reuters, spot gold rose 1% to $4,432.74 per ounce, its highest level since June 5. US gold futures also gained 1.7% to reach $4,492.60 per ounce.
Market analyst Tony Sycamore said the latest rally was partly driven by investors who missed the chance to buy gold during an earlier price decline. The closing of short positions and stronger demand for safe-haven assets have also supported gold prices.
Experts believe gold could rise further in the medium term if global economic and geopolitical conditions remain supportive. Sycamore has also suggested that gold could eventually move towards $5,000 per ounce.
US inflation data in focus
The US consumer price data is due on Wednesday, followed by the Producer Price Index on Thursday. The figures are expected to provide important clues about the future direction of US interest rates.
Weak US jobs data last week reduced expectations of another rate increase by the Federal Reserve next month. The US central bank also kept interest rates unchanged at its July meeting.
Lower interest rates or reduced expectations of rate increases generally support gold prices. Since gold does not pay interest, it can become more attractive when interest rates are low.
Market analyst Fawad Razaqzada said further signs of slower economic growth without a major rise in inflation could reduce expectations for tighter monetary policy. This could put pressure on the dollar and provide additional support to gold.
Geopolitical tensions add support
Tensions between the United States and Iran are also influencing demand for safe-haven investments. New demands from US President Donald Trump for a peace agreement with Iran could make efforts to reopen the Strait of Hormuz more complicated.
Other precious metals also recorded gains in the global market. Silver rose 0.9% to $66.30 per ounce, platinum gained 0.7% to $1,765.26, while palladium increased 0.8% to $1,394 per ounce.
The recent gold rally has once again attracted investors towards the precious metal. However, upcoming US inflation figures and changing interest rate expectations are likely to play a major role in deciding where gold prices move next.
Gold is gaining support from lower expectations of higher US interest rates and stronger demand for safe-haven assets. Investors are now waiting for fresh economic data before making their next move.
If inflation remains under control and the US economy shows signs of slowing, gold could receive more support. However, stronger-than-expected inflation could change interest rate expectations and put pressure on the precious metal.
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