Gold prices extended their rally, reaching a fresh high near $4,663 per ounce on Monday, the highest level since mid-May, following a more than 5% gain last week. US gold futures also advanced to $4,699.10. This surge is largely attributed to a subdued US dollar, which has fallen to multi-month lows, making dollar-priced bullion more affordable for international buyers.
The rally is also fueled by renewed concerns over US fiscal policy and rising government debt. The US Treasury's unexpected decision to increase liquidity-support buybacks for longer-dated government bonds has led to what analysts call a "USD debasement" theme. Strategists at OCBC and TD Securities suggest this intervention signals discomfort with rising long-dated yields and reinforces demand for gold as an alternative store of value, especially as US government debt has surpassed $40 trillion.
Investors are closely watching upcoming economic events for further clues on interest rates and inflation. Key among these are the July Personal Consumption Expenditures (PCE) Price Index, due on Wednesday, and Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole Symposium on Friday. The CME FedWatch Tool currently shows a 38% probability of a rate hike at the Fed's September meeting, but a cautious tone from Warsh could further support gold's upward trajectory.
Technical indicators show gold maintaining a bullish near-term bias, trading above its 100-day and 200-day simple moving averages. The Relative Strength Index (RSI) at 72, however, indicates overbought territory, suggesting potential for a slowdown in the rally. Institutional demand remains strong, with gold-backed ETFs recording their largest single-day inflow since September 2025, marking five consecutive weeks of net inflows, as investors seek diversification amid challenged confidence in US assets.
