Gold gains as US dollar weakens on reduced Fed rate hike expectations

Gold had a good couple of days, and the Federal Reserve deserves most of the credit. Spot gold rose 0.9% to settle at $4,417.24 per ounce on August 17, while December futures climbed 0.8% to $4,473.70, as a softening US dollar and a string of weaker economic readings shifted the calculus on Fed policy. The dollar index fell to its lowest point in more than two months, approaching the psychologically significant 100 level. For gold, a weaker dollar is roughly the equivalent of a tailwind: the metal is priced in dollars globally, so when the greenback drops, buyers holding other currencies effectively get a discount. What the data actually said The catalyst behind the dollar’s slide was a pair of economic reports that came in well below expectations. July nonfarm payrolls fell by 23,000 jobs, a stark miss against the consensus forecast of an 80,000 gain. The unemployment rate held at 4.1%. Inflation also cooperated, at least from the perspective of anyone betting against a rate hike. The July Consumer Price Index rose just 0.1% month-over-month, pushing the annual rate down to 3.4%. Core CPI, which strips out food and energy, increased 0.2% for the month and 2.5% year-over-year. The ...