Spot gold rose sharply on August 17, intraday reaching $4,416.49 per ounce and fluctuating near the key $4,400 resistance level [1, 2]. The metal gained nearly 7.5% last week, breaking out from a consolidation zone around $4,000 [3].
The rebound came amid weakening expectations for a Federal Reserve interest rate hike in September. US July retail sales fell 0.6% month-on-month, below forecasts, dampening bets on tighter monetary policy [1, 4, 5]. Market tools like the CME FedWatch show the chance of a September Fed rate increase has dropped to about 33%, down from near 46-47% a month ago [1, 5, 2].
The US dollar index also slid below the psychologically important 100 mark, making gold cheaper for holders of other currencies and supporting demand, TD Securities strategist Bart Melek said. "A key factor here is the dollar has fallen below the important 100 level," he noted [5]. Ole Hansen, a commodities strategist at Saxo Bank, said a softer dollar combined with reduced rate hike expectations "may have removed the two main headwinds that caused gold prices to pull back earlier" [6].
Adding to gold's appeal were geopolitical tensions in the Middle East. Oil tanker attacks in the Strait of Hormuz on August 17 sharply reduced shipping activity and increased energy market uncertainty [7, 6].
US long-term Treasury yields remain elevated, with the 30-year yield near 5.267%, limiting gold's upside with no interest income [2, 6]. However, central banks continue to buy gold aggressively, with Q2 2026 net purchases reaching a record 289 tons, up 62% year-on-year [2].
Despite the gold rally, risk sentiment showed caution elsewhere. On August 18, Taiwan's stock market dropped over 500 points amid heavy selling, even as the US semiconductor index gained strongly [2, 5]. Finance writer Zhou Daiyun described seeing "a sea of red" in market screens but urged investors not to fear [2].
Market participants are focused on the release of the US July FOMC meeting minutes on August 19. Analysts expect it will provide important signals on the Fed's future policy path and influence gold prices further [3, 5, 2].
