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Gold climbed above USD 4,630 an ounce on August 24, reaching its highest level in over three months. The rally gained momentum as a weaker dollar, softer yields, and easing Federal Reserve hike expectations lifted bullion demand. In India, festive buying also improved as consumers returned after a price correction.
Spot gold reached USD 4,641.27 an ounce on Monday, while MCX gold traded near Rs. 1.6 lakh per 10 grams. Markets now await US inflation data and Federal Reserve Chair Kevin Warsh’s Jackson Hole speech for policy signals. The move reflects safe haven interest as investors reassess rates, currencies, and bond market risks.
Gold gained over 5% last week after the US Treasury announced stronger buyback support for longer dated bonds. The plan helped push yields lower and weakened the dollar, improving gold’s appeal globally. Lower yields also reduce the opportunity cost of holding an asset that generates no interest.
Market pricing now shows only a 38% chance of a Federal Reserve rate hike this month. The probability stood near 84% a month earlier, highlighting the sharp shift in expectations. Slower economic growth, softer labor data, and moderating inflation have strengthened expectations for a cautious policy approach.
Johan Palmberg, Senior Quantitative Analyst at the World Gold Council, sees strong interest supporting gold. He said the balance between Treasury supply and demand become increasingly important for market pricing.
Indian demand gained support as the festive season approaches across key markets. The World Gold Council reported stronger jewelry demand after recent price movements encouraged deferred purchases. Investment interest also remained firm as households seek protection against currency and economic uncertainty.
The next key test comes from US inflation figures and Warsh’s speech later this week. A softer policy signal could support gold, while stronger inflation or higher yields could trigger profit taking.
Also Read: Why Gold Prices Rise During Economic Uncertainty: Key Factors Investors Should Know
