Gold prices rose to their highest level in more than three months on Monday, extending last week's rally. Spot gold climbed 0.7% to $4,636.34 per troy ounce, its strongest since May 15, as traders looked ahead to US inflation data and a speech by Federal Reserve Chair Kevin Warsh later this week. The move came after bullion surged over 5% last week, supported by a weaker US dollar. You can track the live gold price here.
Focus on US inflation and Fed commentary
Market participants are now turning their attention to the July Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred measure of inflation, due later this week. The data will be scrutinised for signs of whether price pressures are easing enough to allow the Fed to consider rate cuts later this year.
Alongside the inflation figures, Chair Kevin Warsh is scheduled to speak at the Jackson Hole economic symposium. His remarks will be parsed for any hints about the future path of US interest rates, which directly influence the opportunity cost of holding non-yielding assets like gold.
Central bank demand and geopolitical factors
Official-sector buying continued to underpin the gold market. Poland's central bank reported that its gold holdings rose to 20.6 million troy ounces (640.2 metric tons) as of the end of July, up from 20.3 million ounces in June. Such purchases by central banks are a significant source of demand for the metal.
Geopolitical tensions also added to gold's safe-haven appeal. Iran's foreign minister dismissed the threat of new US sanctions, while trade disputes escalated as Canada announced retaliatory tariffs on some US goods after trade talks collapsed. These developments kept investors on edge and supported the bid for bullion.
Outlook and other precious metals
Goldman Sachs has said that gold prices could surpass its year-end forecast of $4,900, citing surging demand for bullish options that may amplify further gains. The rally in spot gold last week was driven largely by the US Treasury's buyback support plan, which weakened the dollar and made greenback-priced gold cheaper for holders of other currencies.
Among other precious metals, spot silver gained 0.8% to $69.51 per ounce, platinum rose 0.4% to $1,885.38, and palladium added 0.1% to $1,350.53.
Key takeaways
- Gold hit a three-month high above $4,636 as the dollar weakened and investors awaited US inflation data and Fed Chair Warsh's speech.
- The July PCE price index and Jackson Hole symposium are expected to provide fresh clues on the US interest rate outlook.
- Poland's central bank increased its gold holdings in July, highlighting ongoing official-sector demand.
- Geopolitical tensions and trade disputes, including US-Iran sanctions rhetoric and Canada-US tariffs, supported safe-haven buying.
Common questions
Why did gold rise last week?
Gold rose more than 5% last week after the US Treasury's buyback support plan pressured the dollar. A weaker dollar makes gold more affordable for buyers using other currencies.
What is the PCE price index?
The Personal Consumption Expenditures (PCE) price index is the Federal Reserve's preferred measure of inflation. The July data will be closely watched for clues on the direction of US interest rates.
With several key events on the horizon, gold remains in the spotlight. The combination of dollar weakness, central bank buying, geopolitical uncertainty, and upcoming economic data suggests activity is likely to remain high in the days ahead.