Gold retreats from two-month high as US inflation data cools rate bets
The precious metal gave back its weekly gains after stable US producer prices bolstered expectations that the Federal Reserve will hold interest rates steady next month.
Spot gold retreated from a two-month high, falling 0.5% to $4,330.37 per ounce in early trading. U.S. gold futures for December delivery mirrored the decline, sliding 0.8% to $4,386.80. The pullback erased the metal's gains for the week after it touched its highest level since June 5 on Thursday before settling 1.3% lower.
The reversal was driven by a steady reading on U.S. producer prices in July. Goods prices fell while the cost of services increased only marginally, following a similarly mild consumer inflation report published last month.
These stable inflation metrics have bolstered market expectations that the Federal Reserve will keep interest rates unchanged at its policy meeting next month. For investors, a pause in the tightening cycle typically limits the near-term upside for non-yielding assets like gold, which thrives in lower-rate environments.
Despite the short-term price correction, institutional demand remains a key structural support for the market. The Bank of Korea recently acquired 679,765 shares of the SPDR Gold Trust, valued at roughly $250.4 million as of the end of June, according to a U.S. Securities and Exchange Commission filing.
This acquisition marks the South Korean central bank's first disclosed gold investment since it purchased physical bullion in 2013. Such sustained accumulation by central banks underscores a broader strategy among monetary authorities to diversify reserves away from fiat currencies and hedge against systemic financial risks.
The broader precious metals complex also faced downward pressure amid the shifting rate expectations. Spot silver slipped 0.8% to $63.92 per ounce, while platinum decreased 1% to $1,700.60. Palladium eased 0.3% to $1,303.25, with both platinum group metals hitting their lowest levels since August 4.
In a separate development highlighting the geopolitical significance of sovereign bullion, Venezuelan authorities announced plans to recover gold reserves held overseas. National Assembly chief Jorge Rodriguez stated the government will focus on reclaiming an estimated $4 billion in gold currently stored in the Bank of England's underground vaults, even as the country grapples with monthly inflation surging to 20%.
