Gold prices surge to 3-month high
What's the story
Gold prices have surged to their highest level in over three months, reaching over $4,641 per ounce. The increase is mainly due to a weaker US dollar and investor interest in upcoming US inflation data and Federal Reserve Chair Kevin Warsh's speech. Spot gold rose by 0.8% today after hitting a peak since May 15 earlier in the session. Last week, it had gained over 5%.
Dollar impact
Weaker US dollar boosts gold prices
The US dollar is trading near multi-month lows, making gold more affordable for buyers using other currencies. This has provided fresh support to bullion prices.
Tim Waterer, chief market analyst at KCM Trade, said, "Gold is looking sprightly to start the week," adding that the metal was taking its cues from a softer dollar and higher yields amid economic uncertainty and policy uncertainty.
Market anticipation
Investors await US inflation data, Warsh's speech
Investors are now looking forward to the July Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gage, for clues about future US interest rates.
Markets will also closely watch Warsh's speech at the Jackson Hole economic symposium later this week.
A cautious or balanced tone from him could keep expectations of policy flexibility alive and further support gold prices.
Market factors
Geopolitical risks driving demand for safe-haven assets
Geopolitical risks are another factor driving demand for safe-haven assets like gold.
The US has threatened Iran with its "greatest financial offensive ever marshaled," with sanctions likely to target Iran's trade partners.
Meanwhile, the Treasury's plans to buy back longer-dated bonds have added to market debate over US debt and the dollar's outlook.