Gold prices hit their highest since early June, boosted by traders scaling back rate hike expectations and renewed ETF inflows, signalling a shift in investor sentiment amid US monetary policy uncertainty.
Gold has climbed to its highest level since early June as traders trim bets on further Federal Reserve rate increases, according to Commerzbank analyst Carsten Fritsch. He said the metal briefly touched $4,450 a troy ounce before easing back, but the broader trend still points higher as expectations for tighter US policy have ebbed.
Fritsch said Fed Funds futures have moved noticeably in recent weeks, with the market’s implied year-end policy rate slipping from 4% at the end of July to 3.86% now. That shift suggests 14 basis points of expected tightening has been removed from pricing, reinforcing bullion’s appeal at a time when lower rates typically reduce the opportunity cost of holding non-yielding assets such as gold.
The rally has also been supported by a return of investor demand through exchange-traded funds. According to Bloomberg data cited by Commerzbank, gold-backed ETFs have recorded inflows for six straight trading days, the longest uninterrupted run since April, with nearly 21 tonnes added over that span. The World Gold Council has previously noted that ETF flows can swing sharply with changes in rates, the dollar and wider risk sentiment, and that they remain a key barometer of investor appetite for the metal.
Even so, the move has not been one-way. Gold slipped to about $4,320 after the latest rise, underlining the choppy trading that has marked the market in recent months. Commerzbank’s view is that bullion still has room to advance if the Federal Reserve stays on hold, while renewed ETF buying suggests investors are once again treating the metal as a store of value amid uncertainty over the US rate outlook.
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