Gold prices were on track to record their first monthly gain since February on Friday, supported by a weaker U.S. dollar and the Federal Reserve’s decision to keep interest rates unchanged.
Gold traded near $4,080 per ounce and posted gains of almost 2% during July. However, prices edged lower during Friday’s session as some investors chose to lock in profits after the metal’s strong rally in recent days.
Gold also received support from the Federal Reserve’s decision to leave interest rates unchanged. Ongoing inflation concerns, fueled in part by tensions in the Middle East, have increased demand for gold as a safe-haven asset.
Another factor helping gold was the decline in the U.S. dollar. The dollar fell about 1% against a basket of major currencies after Japan stepped in to support the yen. A weaker dollar generally makes gold more attractive to buyers outside the United States. The dollar later recovered some ground and was up 0.2% during Friday trading.
Federal Reserve Chairman Kevin Warsh said that keeping rates unchanged does not mean the central bank is finished taking action. He noted that if inflation pressures continue, further interest rate increases could still be considered in the future.
Meanwhile, Helen Amos, an analyst at BMO Capital Markets, said markets may have already moved past the peak of inflation concerns. She believes the next major event that could influence gold prices will be the Jackson Hole Economic Symposium, scheduled for late August.
