I. Spot Gold Retracts Sharply After Intraday Surge
Spot gold pulled back sharply to settle near $4,350 per ounce down 1.3% on August 13 after reaching an intraday peak of $4,449.39. COMEX gold futures tested the $4,500 mark for a second consecutive session hitting $4,509.10 before retreating to $4,407. Profit-taking by short-term traders near the critical $4,500 psychological resistance triggered a rapid cooldown from two-month highs.
II. US July PPI Flatlines, Rate Hike Bets Decline
US PPI for July remained flat month-over-month undershooting expectations of a 0.2% rise. Combined with July CPI cooling to 3.4% year-over-year, market probability for a September Fed rate hike plummeted from 55% a week ago to roughly 34%.
Two-year and ten-year Treasury yields retreated accordingly. However, Fed officials remain divided on inflation persistence, leaving forward policy trajectories dependent on upcoming economic releases.
III. Dispute Over Strait of Hormuz Escalates
Tensions intensified in the Middle East as Iranian officials declared full operational control over the Strait of Hormuz, warning against unauthorized transit. This follows statement from US President Trump claiming complete US authority over the waterway. Conflicting claims over the vital shipping bottleneck continue to inject risk premiums into energy logistics and broader commodity markets.
IV. Global Central Banks Expand Gold Reserves
Central banks continue to strengthen physical gold allocations. World Gold Council data reveals Q2 net official purchases reached 288.9 tonnes, up 62% year-over-year. China reported its 21st consecutive month of reserve expansion to 76.08 million ounces, while South Korea resumed gold purchases for the first time in 13 years. Global gold ETFs also turned positive in July with net inflows of 23 tonnes.
V. Market Outlook
Following two unsuccessful attempts to hold above $4,500 in futures, gold has re-entered a high-level consolidation zone. Near-term focus centers on support between $4,300 and $4,350 per ounce. Upcoming US retail sales data alongside Middle East naval developments will dictate the next directional catalyst for bullion.