Gold prices climbed to their highest level in more than three months on Monday. The rise came as the US dollar weakened and investors focused on upcoming US inflation data.
Gold also gained attention ahead of a speech by US Federal Reserve Chair Kevin Warsh. He is expected to speak at the Jackson Hole conference later this week.
On Monday, August 24, gold prices rose 0.6% to $4,654 per ounce. Futures prices also moved higher and exceeded $4,680 per ounce.
The weaker US dollar has provided strong support for gold. The dollar remains near its lowest level in several months.
A weaker dollar generally makes gold cheaper for buyers using other currencies. Therefore, international demand can increase when the US currency loses value.
Gold has also benefited from expectations surrounding US Treasury bonds. The US Treasury has signaled plans to buy longer-term government bonds. This development has added to market expectations about future borrowing costs.
Tim Waterer, a financial markets analyst at KCM Trade, said gold started the week strongly. He noted that the precious metal has returned to an upward trend.
According to Waterer, traders are watching the dollar and US Treasury yields closely. They also want clearer signals about the direction of US monetary policy.
Meanwhile, investors are preparing for the release of US consumer price data for July. The figures could provide new clues about inflation and future Federal Reserve decisions.
Markets are also waiting for Warsh’s speech at the Jackson Hole conference. His comments could influence expectations for US interest rates in the coming months.
Waterer said traders will closely examine every signal in Warsh’s speech. Investors want to know whether the Federal Reserve could adopt a softer monetary policy.
If Warsh takes a dovish position, gold could gain additional support. Lower interest rates typically benefit gold because the precious metal does not pay interest.
However, stronger inflation data could limit gold’s gains. Therefore, traders will closely monitor both the inflation figures and Warsh’s comments before making new investment decisions.
