Wall Street goes full-bull on gold as rate-hike bets recede, Main Street maintains bullish majority with Fed minutes on the menu

Gold prices pushed higher this week, as fading expectations for a September Fed rate hike helped the precious metal extend its August rebound despite intermittent pressure from a firmer dollar, rising oil prices, and profit-taking. Spot gold kicked off the week trading at $4,342.50 per ounce on Sunday evening, and the yellow metal moved steadily higher through Monday and Tuesday as traders positioned for the week’s U.S. inflation data. The rally accelerated Wednesday after July CPI came in largely in line with expectations, easing concerns that the Federal Reserve would need to tighten policy in September and helping gold prices push to a 10-week high. Spot prices ultimately set their weekly high at $4,450.23 per ounce on Thursday before sellers took over. Gold prices pulled back sharply Thursday after softer wholesale inflation data reduced its appeal as an inflation hedge and prompted traders to take profits following the four-day rally. The metal remained under pressure into Friday as oil prices climbed on continued uncertainty around the war with Iran and Treasury yields also edged higher, with spot gold setting its weekly low at $4,311.22 per ounce early on Friday. The decline proved short-lived, however, after Friday morning’s U.S. retail sales report showed an unexpected 0.6% drop, reinforcing expectations that the Fed would likely leave rates unchanged at its September meeting. Gold prices recovered into the close as rate-hike expectations faded, with the precious metal finishing the week modestly higher. The latest Kitco News Weekly Gold Survey showed Wall Street experts overwhelmingly bullish on the precious metal’s prospects, while Main Street sentiment also held in firmly bullish territory heading into next week. “Up, but modestly,” said Adrian Day, president of Adrian Day Asset Management. “The ongoing conflict between the prospects for higher rates on the one hand and weaker fiscal conditions on the other is keeping gold in a trading range, with very firm support on the downside, but not yet willing to rip higher.” “Down,” said Darin Newsom, senior market analyst at Barchart.com. “Fundamentally speaking, nothing has changed with the gold market. Central banks continue to provide support while investment money ebbs and flows. Of the financial numbers released this past week, the one that stood out to me was the US defect growing by $432 billion during July, reportedly the largest monthly gap since March 2021. The bottom line is this should continue to reduce global confidence in the US dollar, putting pressure on the greenback, making real inflation an ongoing issue.” “Riding this train of thought further, gold should find long-term buying interest,” Newsom said. “So why do I think the market could move lower next week? From a technical point of view, the December futures contract is in position to move into a short-term downtrend on its daily close-only chart. If so, it could see a selloff next week.” “I like gold higher next week and look for a test on the 200-day moving average near $4503,” said Marc Chandler, managing director at Bannockburn Global Forex. “Gold has not been above it since the first week in June.” “Up,” said Rich Checkan, president and COO of Asset Strategies International. “The rate of increase of both consumer and producer price inflation cooled slightly last month. Prices are still rising, but they are doing so more slowly. That, coupled with a net loss of new jobs and an increase in new jobless claims, has given investors a belief that the Federal Reserve will not increase interest rates at the September Federal Open Market Committee (FOMC) meeting.” “Gold has surged on this latest data, bouncing strongly off the consolidation lows near $4,000 per ounce,” Checkan said. “The bias is clearly upward.” Daniel Pavilonis, senior commodities broker at StoneX Group, told Kitco news that despite gold’s gains over the last two weeks, he doesn’t see the broader rally resuming just yet.