Gold Climbs to Over Three-Month High on Weak Dollar

Gold rose nearly 1% to above $4,650 an ounce on Monday, reaching its highest level since mid-May, as a subdued dollar boosted the appeal of bullion. Investors are now awaiting US inflation data and comments from Federal Reserve Chair Kevin Warsh this week for clues on the interest-rate outlook. Gold gained more than 5% last week after a US Treasury buyback support plan pushed the dollar to multi-month lows. Markets are now focused on the July PCE price index due Wednesday and Warsh’s speech at the Jackson Hole Symposium on Friday. Traders are pricing in roughly a 40% chance of a rate hike in September, while the probability of rates remaining unchanged stands at around 60%, according to CME FedWatch. On the geopolitical front, the US threatened Iran with what it described as “the greatest financial offensive ever marshalled,” as Washington prepares to impose economic sanctions targeting Iran’s trade partners.

Gold rose to around $4,630 an ounce on Monday, extending last week’s gains and reaching its highest level since mid-May, as concerns over US debt management and fiscal sustainability persisted following the Treasury’s unexpected ramp-up in longer-dated debt buybacks. The move pushed bond yields and the dollar lower, reviving the so-called debasement trade and boosting gold’s appeal as an alternative store of value. On the geopolitical front, threatened new US sanctions on Iran are raising the risk of further disruptions to Iranian oil supplies, potentially pushing energy prices higher and limiting the scope for interest-rate cuts. Investors will now focus on July PCE inflation data and Fed Chair Warsh’s Jackson Hole speech for further clues on the US rate outlook. Meanwhile, Canada’s planned retaliatory tariffs on some US goods after trade talks collapsed add to broader economic uncertainty.

Gold climbed to over $4,600 an ounce on Friday, its highest level since mid-May, and extended weekly gains to around 5%. The rally was supported by renewed concerns over US fiscal sustainability after the Treasury unexpectedly increased its planned purchases of longer-dated government debt, pushing bond yields and the dollar lower. The intervention has raised questions about Washington’s ability to manage rising borrowing costs and reinforced demand for gold as an alternative store of value. Treasury Secretary Scott Bessent has indicated that further buybacks could follow, while the administration is preparing additional measures to address elevated financing costs. Meanwhile, rising oil prices could limit further gains by keeping inflation pressures elevated and reducing expectations for interest-rate cuts. The US campaign to intensify economic pressure on Iran has also weakened hopes for a quick reopening of the Strait of Hormuz, supporting energy prices.