Gold breaks above $4,400 as central bank reserve race accelerates

COMEX gold climbed above $4,400 an ounce, testing two-month highs, as U.S. inflation cooled to 3.4 percent in July and central banks stepped up reserve buying.

The inflation rate declined from 3.5 percent in June, in line with analyst estimates, while the FedWatch Tool showed a 61.9 percent probability that the Federal Reserve leaves rates unchanged at its September meeting, according to CME data.

Treasury yields moved lower, with the two-year note falling below 4.19 percent and the 10-year settling near 4.67 percent, a tailwind for the non-yielding metal. Gold cleared resistance at $4,360-$4,380 and now faces the $4,480-$4,500 band, with support at $4,360 and then $4,300.

The breakout marks the start of a global gold reserve accumulation race among central banks, a trend that could lift gold mining stocks and deepen de-dollarization as geopolitical uncertainty drives safe-haven flows away from fiat currencies.

Reserve Buying Reshapes Bullion Demand

Central bank accumulation has emerged as a structural demand driver for bullion, with nations diversifying reserves away from the dollar. The trend supports higher prices even as the dollar gained ground against a broad basket of currencies, which typically pressures gold.

Silver gained as the gold/silver ratio pulled back below 67.50, with the metal attempting to settle above resistance at $65.00-$66.00. A break above $66.00 would open the path toward $71.00-$72.00, while a move below $64.00 risks a slide toward $61.00-$62.00.

Platinum made an attempt above resistance at $1,780-$1,800 but lost momentum, with the next ceiling at $1,870-$1,890. Palladium rose 0.4 percent, while oil prices traded flat in choppy trading. The divergence across precious metals shows the reserve race is concentrated in gold rather than the broader complex.

September Fed Meeting Is the Next Signal

The Federal Reserve's September meeting is the next signal for bullion, with markets pricing a 61.9 percent chance of unchanged rates and a first 25-basis-point hike in December. A dovish outcome would extend the rally toward the $4,480-$4,500 band, while a break below $4,360 would open a slide toward $4,300. Gold last traded in this range during the 2024-2025 accumulation cycle, when central bank purchases reached record levels, according to World Gold Council data.

This article is for informational purposes only and does not constitute investment advice.