Gold prices are trading around $4,080, consolidating below $4,100 after the Federal Reserve left interest rates unchanged at its July meeting. This positioning puts gold in line for a monthly gain. The US Dollar Index (DXY) is trading around 100.67, near its lowest level in two weeks, which has provided support for gold. This weaker dollar is largely attributed to suspected intervention by Japanese authorities to prop up the yen, which saw a significant jump against the dollar.
The Japanese yen surged, with the dollar falling 2.6 percent to 159.225 yen, its weakest since May 14. Analysts like Tom Nakamura of AGF Investments and Roberto Cobo Garcia of BBVA suggested that the sudden and significant movement in the USD/JPY pair pointed to official intervention, although there has been no official confirmation from Japanese authorities. This intervention was likely intended to halt the yen's slide to new multi-decade lows and took advantage of bearish momentum generated by weaker US economic data.
Adding to the dollar's weakness were US inflation data and GDP figures. US inflation, measured by the Personal Consumption Expenditures Price Index, slowed to 3.7 percent in the 12 months through June, down from 4.1 percent in May. Additionally, US economic growth slowed in the second quarter, with GDP increasing at an annualized rate of 1.5 percent, below the forecasted 2.1 percent. Despite these factors supporting gold, rising longer-dated Treasury yields, with the 30-year yield climbing above 5.20 percent, limited gold's upward momentum as markets reacted to the Fed Chair's firm stance on inflation.
