XAU/USD retreats from a June 5 high near $4,450 as oil-driven inflation fears revive Fed tightening expectations.
Gold prices pulled back from a June 5 high of around $4,450 during Thursday’s Asian session, trading near the lower end of their daily range. The retreat follows fading optimism over moderating US inflation, as rising energy prices fuel concerns about renewed inflationary pressures and potential Federal Reserve rate hikes by year-end.
US Consumer Price Index (CPI) data released Wednesday showed headline inflation easing to 3.4% YoY in July from 3.5%, in line with expectations. Core CPI, excluding food and energy, rose 0.2% MoM and 2.5% YoY, matching consensus. Weak July Nonfarm Payrolls had previously bolstered hopes for a Fed pause in September, but geopolitical tensions, including US-Iran standoffs and Red Sea attacks, have kept oil prices volatile.
Investors are now pricing in at least one Fed rate hike before December, reducing demand for non-yielding assets like gold. The US dollar’s strength further weighed on XAU/USD, as higher rates typically support the greenback.