Gold prices are rising again
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Gold prices rose to their highest level in more than two months Wednesday — hitting $4,465 an ounce.
Why it matters: The precious metal has reversed a slump that began shortly after the start of the war with Iran.
- It's a sign that inflation expectations are easing.
Flashback: Investors expected inflation and real yields to rise when the war started, which made gold — a non-yielding asset — less appealing, and undermined the notion that it behaves as a safe asset in turbulent times.
State of play: But after the most recent meeting of Federal Reserve policymakers, at the end of July, investors got a "dovish surprise" — and gold began its ascent.
- Wednesday's relatively benign CPI report offered more assurance.
Follow the money: There might be an even simpler explanation for gold's leg up: China reported buying nearly 20 metric tons of gold in July, its largest purchase since October 2023.
- Nothing like more demand to add a little polish to prices.
