Gold extended its previous week’s rally into Asian trading on Monday, touching fresh three-month highs above $4,650 per troy ounce. The move came as the US dollar faced a combination of headwinds, including renewed trade tensions between the US and Canada, reduced expectations for a Federal Reserve rate hike in September, and persistent geopolitical uncertainty.
Dollar under pressure from multiple directions
The US dollar has been weighed down by growing doubts about the American economic outlook. A recent surge in Treasury bond yields prompted the US Treasury to announce a buyback of longer-dated bonds, a step that added to uncertainty. At the same time, tariff tensions between the US and Canada escalated over the weekend. The US imposed 50% tariffs on some Canadian products on Saturday, and Canadian Prime Minister Mark Carney responded early Monday by announcing retaliatory tariffs beginning on September 8. This tit-for-tat move further undermined the greenback.
Meanwhile, expectations for a Federal Reserve interest rate hike in September have receded after a string of disappointing US economic data. Lower rate hike bets tend to reduce the opportunity cost of holding non-yielding assets such as gold, which does not pay interest. That dynamic has provided additional support for the precious metal.
Geopolitical tensions reinforce safe-haven appeal
Gold’s traditional role as a safe-haven asset has also seen a revival amid ongoing US-Iran tensions. The US threatened Iran with what it called “the greatest financial offensive ever marshalled” as it prepared to roll out economic sanctions targeting Iran’s trade partners. Iran’s Foreign Minister Abbas Araghchi dismissed the threat as a sign of desperation, saying the expected measures would fail. The standoff has kept geopolitical risk elevated, adding to demand for gold as a store of value independent of any single government.
Key events this week: PCE data and Jackson Hole
Investors are now turning their attention to two major catalysts this week. The US July core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, is due on Wednesday. Analysts at Deutsche Bank expect core PCE to rise by 0.18% month-on-month, up from 0.1% in June. Alongside the PCE report, data on personal income, spending and durable goods orders will also be released.
The other key event is the Jackson Hole economic policy symposium, running from August 27 to 29. This year’s theme is “Financial Innovation: Implications for Payments and Policy.” Deutsche Bank described the symposium as “the key economic event next week,” with particular attention on the speech by Fed Chair Kevin Warsh on Friday. His remarks will be scrutinised for any signals about the future path of monetary policy.
Technical outlook: overbought but still bullish
From a technical perspective, spot gold (XAU/USD) traded at $4,641.11 on Monday, maintaining a strong bullish bias. The price holds above its 21-day, 50-day, 100-day and 200-day simple moving averages (SMAs). The 200-day SMA near $4,516.89 provides a nearby dynamic floor. The Relative Strength Index (14) has entered overbought territory at around 71.8, suggesting that while the broader uptrend remains intact, a short-term pause or corrective pullback is possible after the recent vertical advance.
On the downside, initial support lies at the 200-day SMA ($4,516.89), followed by the 100-day SMA around $4,379.67. Below that, the 50-day SMA at $4,179.14 and the 21-day SMA at $4,295.91 form additional demand layers. As long as the price continues to trade above these averages, the medium-term structure is likely to remain biased to the upside.
Key takeaways
- Gold reached three-month highs above $4,650 as the US dollar weakened on tariff tensions and fading rate hike bets.
- US-Canada trade escalation and reduced expectations for a September Fed rate hike weighed on the greenback.
- Geopolitical risks, particularly US-Iran tensions, revived safe-haven demand for gold.
- This week’s focus is on the US July core PCE inflation data and Fed Chair Kevin Warsh’s speech at the Jackson Hole symposium.
Common questions
Why is gold rising?
Gold is rising due to a combination of US dollar weakness, reduced expectations for a Federal Reserve rate hike, trade tensions between the US and Canada, and safe-haven demand stemming from US-Iran geopolitical risks.
What is the Jackson Hole symposium?
The Jackson Hole Economic Policy Symposium is an annual conference hosted by the Federal Reserve Bank of Kansas City. Central bankers, economists and policymakers gather to discuss key economic issues. This year’s theme is financial innovation, and Fed Chair Kevin Warsh is scheduled to speak on Friday, August 28.
What are the key support levels for gold?
Key support levels include the 200-day simple moving average near $4,516.89, the 100-day SMA around $4,379.67, and the 50-day SMA at $4,179.14. These levels are likely to limit downside moves as long as the medium-term uptrend remains intact.
Gold’s rally reflects a confluence of dollar weakness, geopolitical risk and shifting Fed expectations. The coming days will test whether the momentum can hold as traders digest inflation data and central bank commentary. Readers can monitor the latest movements on the live gold price page.