Gold eases after sharp gains as inflation concerns come to the fore

Gold prices eased on Thursday as traders booked profits from recent gains, while a surge in oil prices reignited concerns about inflation. The precious metal retreated from its highest level since early June, trading down 0.3% at $4,509.91 per ounce by mid-afternoon.

Wednesday saw gold prices leap over 4%, driven by a sharp drop in the U.S. dollar and bond yields following the Treasury's announcement of increased buybacks of longer-dated bonds. However, the momentum faltered as hawkish minutes from the U.S. Federal Reserve's July meeting and climbing oil prices shifted market sentiment.

"Gold has come under routine profit-taking pressure following the previous session's strong gains," said Jim Wyckoff, a market analyst at American Gold Exchange. He noted that the Fed's minutes, which revealed some policymakers' concerns about inflation and openness to further rate hikes, along with higher oil prices, undermined the metal's advance.

Despite the pullback, analysts at Morgan Stanley suggested that gold could potentially exceed $5,000 per ounce in 2027, or possibly sooner, especially if the Federal Reserve maintains its current interest rate policy. However, they cautioned that volatility is expected. In other precious metals, silver saw a notable increase, rising 1.8% to $68.10 per ounce, while platinum gained 0.3% to $1,830.28. Palladium, however, edged slightly lower.

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Gold has come under routine profit-taking pressure following the previous session's strong gains.