Gold prices retreated slightly on Thursday but remained near historical highs above $3,600. Spot gold fell 0.3% to $3,629/ounce, while December US gold futures contracts dropped 0.4% to $3,666.
The US dollar index (DXY) rose 0.2% to a one-week high, making dollar-denominated gold more expensive for foreign investors. According to experts, profit-taking also played a role in the price pullback.
Lukman Otunuga from FXTM said, “Gold is holding strong above $3,600. The surprise drop in producer prices limited downward pressure.”
Investors are now focused on the US CPI data. According to a Reuters survey, a monthly increase of 0.3% and an annual increase of 2.9% are expected in August. Higher inflation data could weaken expectations of a Fed rate cut in October and pull gold down to the $3,500 level. However, data that falls below expectations could open the door to new records.
Markets are almost certain that the Fed will cut interest rates by 25 basis points next week.
