Gold · Daily Analysis
Gold Hits Highest Level Since June as In-Line Inflation Data Cuts Rate-Hike Odds
Executive Summary
At the close of trading, the price of gold rose by $40 (+0.91%), increasing from $4,367 to $4,407 per troy ounce. During the trading session, gold climbed to a more than two-month high of $4,467 per troy ounce.
Fundamental Analysis
Gold extended its rally after U.S. inflation data came in line with expectations, reducing expectations for another Federal Reserve rate hike in September. The weaker-than-expected July jobs report from the previous week had already lowered rate-hike expectations, and the latest inflation data reinforced that shift.
U.S. inflation in July increased by 0.1%, matching expectations. Traders reduced the probability of a September rate hike to around 40%, down from 46% before the inflation report. Lower expected interest rates reduce the opportunity cost of holding non-yielding gold, supporting demand for the metal.
Gold also benefited from a weaker U.S. dollar and technical momentum. The metal moved above its 100-day moving average of $4,387, strengthening the bullish technical picture and helping prices reach their highest level since June 5.
Geopolitical risks remained an additional factor. The U.S. and Iran-aligned Houthis reported separate attacks on shipping, while prospects for ending the Iran war appeared to weaken. A renewed escalation could push oil prices toward $100 per barrel, potentially increasing inflation and interest-rate expectations, which could put pressure on gold.
Technical Analysis
Gold's break above its 100-day moving average of $4,387 is a constructive technical signal, adding a momentum-driven tailwind on top of the fundamental rate-cut narrative driving the session.
Key Levels
| Session High | $4,467 |
| Session Close | $4,407 |
| 100-Day Moving Average | $4,387 |
Outlook
Overall, gold's advance was primarily driven by U.S. inflation data that reduced expectations for a September Federal Reserve rate hike. A weaker dollar, improving technical momentum and continued uncertainty around the Iran conflict provided additional support, while higher oil prices and renewed geopolitical tensions remain potential risks to the rally.
Current price: Gold — $4,407 per troy ounce
What to Watch Next
- Thursday's Producer Price Index report — the next major inflation data point that could further shift the roughly 40% September rate-hike probability in either direction.
- Whether the U.S.-Iran conflict escalates following reports of separate shipping attacks by the U.S. and Houthi forces. A push toward $100 oil would reintroduce a meaningful inflation headwind for gold.
- Whether gold holds above its newly broken 100-day moving average of $4,387, which now serves as a technical support level to watch.
Bottom Line
Today's rally combined three reinforcing signals — in-line inflation data, a weaker dollar, and a technical breakout above the 100-day average — pushing gold to its best level since early June. The risk to watch is oil: a renewed escalation toward $100 a barrel could quickly flip the inflation narrative that's been supporting gold all week.
This article is provided for informational purposes only and does not constitute investment, financial, or trading advice.