Gold is holding above $4,400 as weaker US economic data reduces expectations of another Federal Reserve rate increase in September. The change in rate expectations has supported gold by putting pressure on US Treasury yields and the dollar, while attention now turns to whether the metal can break through resistance near $4,500.
Spot gold reached an intraday high of $4,416.43 on 17 August after extending gains from the previous session. The move followed weaker US retail sales data and came after softer employment figures and inflation readings that did not show a clear acceleration in price pressures.
US retail sales fell by 0.6% month on month in July, compared with a 0.2% increase in June and expectations for a 0.1% rise. Annual retail sales growth slowed to 5.0% from a revised 6.8%.
The data has lowered expectations of a September rate increase. Market pricing now places the probability of a move at roughly one-third. Lower interest-rate expectations reduce the opportunity cost of holding an asset that does not pay interest.
The weaker rate outlook has also weighed on the US dollar and Treasury yields. Both developments are supportive for gold. A softer dollar makes gold cheaper for buyers using other currencies, while lower bond yields reduce the relative appeal of interest-paying assets.
Cora Gold Ltd (LON:CORA), together with its subsidiaries, explores for and develops mineral projects in West Africa. The company primarily explores for gold deposits. Its flagship project is the Sanankoro Gold project located in the Yanfolila Gold Belt, Southern Mali.
