Gold Breaks US$4,400; Fed Rate Hike Expectations Continue to Decline!
Gold prices extended their gains during Monday's Asian trading session (August 17), hovering around US$4,405 per troy ounce. Gold maintained its momentum after a series of weaker-than-expected US economic data weighed on the dollar and further dampened expectations for a Federal Reserve interest rate hike in September.
The latest support stemmed from US retail sales data for July, which fell 0.6% month-on-month—reversing June's 0.2% rise and coming in well below the forecast 0.1% increase. Year-on-year retail sales growth also slowed to 5.0% from the previous 6.8%, signaling that US consumer spending is beginning to lose steam.
This data complements last week's CPI and PPI figures, which indicated that inflationary pressures remain relatively contained. The combination of easing inflation and weakening consumption has led the market to increasingly believe the Fed need not rush into raising interest rates. Expectations for a September rate hike have now receded, providing a positive tailwind for gold, a non-yielding asset.
Meanwhile, US-Iran tensions remain a key factor for the market. Iranian Deputy Foreign Minister Kazem Gharibabadi called on Washington to acknowledge the failure of its strategy after President Donald Trump issued fresh, harsh statements regarding the Strait of Hormuz.
Iranian Foreign Minister Abbas Araghchi also emphasized that there are currently no negotiations taking place between Tehran and Washington. Iran has stated that shipping through the Strait of Hormuz can only resume if the US accepts certain conditions set by Tehran, keeping the risk to this vital energy corridor high.
Newsmaker Analysis: A weakening dollar and diminishing expectations for a Fed rate hike are the primary drivers pushing gold toward the psychological US$4,400 level. US-Iran tensions are also sustaining safe-haven demand, although potential oil price spikes resulting from the conflict could reignite inflation risks. If gold manages to hold above US$4,400, the momentum to retest the previous peak area opens up again, whereas a failure to break through that level could trigger short-term consolidation.
Source: Newsmaker.id
