Gold prices hit their highest levels in more than three months during Monday trading, supported by a weaker U.S. dollar and growing safe-haven demand amid escalating geopolitical tensions, as investors await pivotal U.S. inflation data and a speech by Federal Reserve Chair Kevin Warsh.
Spot gold rose 0.9 percent to $4,643.63 per ounce by 0644 GMT, its highest level since mid-May, after having climbed more than five percent last week. U.S. gold futures also gained 0.4 percent to $4,699.10 per ounce.
The rally comes as the dollar languished near multi-month lows after the U.S. Treasury Department pledged to buy back more long-term bonds, a support plan that raised concerns about U.S. fiscal prospects and pressured the currency. A weaker dollar makes the dollar-priced precious metal less expensive for holders of other currencies, boosting demand.
Market participants are focused this week on the July Personal Consumption Expenditures Price Index, the U.S. central bank’s preferred inflation gauge, along with Warsh’s anticipated speech at the annual Jackson Hole symposium, seeking fresh signals on the interest rate path.
In this context, Tim Waterer, chief market analyst at KCM Trade, said traders will be watching for any shift in monetary policy tone and how it aligns with developments in the bond market over the recent period. He added that any balanced or cautious tone would likely keep the door open for gold to extend its gains.
Gold’s safe-haven appeal was reinforced by escalating geopolitical developments, as the United States threatens Iran with what it described as “the largest financial attack ever” as part of preparations to impose economic sanctions targeting Iran’s trading partners. In response, Iran’s foreign minister described the threat of new U.S. sanctions as a sign of desperation, asserting that the expected new measures would not succeed in defeating Tehran.
On another trade front, Canadian Prime Minister Mark Carney announced that Canada would impose tariffs on certain U.S. goods in response to the 50 percent tariffs ordered by U.S. President Donald Trump on Canadian products, following the collapse of trade negotiations between the two neighbors.
A Goldman Sachs note released on Friday indicated that gold prices could exceed the bank’s year-end forecast of $4,900, as growing demand for bullish gold options could fuel additional gains. In a sign of continued official-sector demand, the National Bank of Poland announced that its gold reserves rose to 20.6 million troy ounces (640.2 metric tons) by the end of July, compared with 20.3 million ounces at the end of June.
As for other precious metals, not all moved in the same direction. Spot silver rose 0.1 percent to $69.03 per ounce, while other data showed it declining 0.3 percent to $68.76. Platinum gained 0.5 percent to $1,887.28, while palladium rose 0.3 percent to $1,353.34, though other follow-up data showed platinum falling 0.5 percent to $1,868.03 and palladium declining 0.3 percent to $1,345.87.
This divergence in precious metals performance reflects their differing sensitivity to the same macroeconomic conditions, as industrial metals such as silver, platinum, and palladium respond differently to factors like slowing industrial growth and profit-taking compared to gold, which benefits more from falling interest rates and a weaker dollar.
Analysts view gold’s break above the 200-day moving average as a positive technical signal, as this breakout, combined with the strong gains achieved last week, bolsters buyers’ confidence in the continuation of the upward trend. With current momentum persisting, the $4,700 level stands out as the next key target in the market, especially as the distance to it has narrowed after prices reached new record levels.
Nevertheless, gold’s trajectory remains contingent on several variable factors, most notably the upcoming U.S. inflation data, the tone of the Federal Reserve Chair’s speech, the dollar’s direction, and geopolitical developments. If Personal Consumption Expenditures data comes in below expectations, it could reinforce expectations of interest rate cuts, which would support the non-yielding precious metal. Conversely, if the data comes in elevated, it could push the central bank to adopt a more cautious stance, potentially limiting gold’s gains.