Gold Holds Above $4,500; Profit-Taking and Inflation Risks Cap Gains
Gold prices remained relatively stable during Thursday's trading (August 20) following a period of significant downward pressure. Spot gold traded around US$4,516.19 per troy ounce—down slightly by 0.1%—after having previously dropped to US$4,450.08. Gold had touched its highest level since June 2 before succumbing to profit-taking.
In the previous session, gold surged more than 4% after the US Treasury Department announced an increase in long-term bond buybacks. That policy drove Treasury prices up, suppressed yields, and weakened the US dollar. Meanwhile, US gold futures closed up approximately 0.6% at US$4,571.40.
Today's pressure on gold stemmed primarily from profit-taking following the previous day's massive rally. Additionally, relatively hawkish FOMC minutes and rising oil prices reignited inflation concerns. Such risks could prompt the Federal Reserve to maintain tight policies for longer or even reconsider interest rate hikes.
However, selling pressure began to ease after US Treasury Secretary Scott Bessent stated that the government could expand Treasury buybacks to more than US$4 billion per issuance. The prospect of lower long-term real yields provided renewed support for gold by reducing the opportunity cost of holding non-interest-bearing assets.
The market currently estimates a 67.4% probability that the Fed will hold interest rates steady in September. Meanwhile, an oil rally to a more than three-week high—driven by the stalemate in the Iran conflict—kept inflation risks elevated. Morgan Stanley also maintained a long-term bullish outlook, seeing the potential for gold to break through US$5,000 per ounce by 2027—or possibly sooner—despite expected continued volatility.
Newsmaker Analysis: Gold currently retains a bullish bias but remains volatile. The rebound from the US$4,450 area to US$4,516 indicates that buyers remain active in defending against price drops. As long as the price holds above US$4,500, the possibility of retesting the US$4,540–US$4,570 range remains open. However, rising oil prices and a hawkish Fed stance could trigger a correction if Treasury yields turn upward.
Source: Newsmaker.id
