Quick overview

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The yellow metal started the new week marginally positive after posting gains of more than 2 percent, marking a strong finish to August.

 

Buyers have held this level and maintained upward momentum since last year after testing its 100-day moving average. However, after months of consolidation, there is renewed enthusiasm for gold as we start the new week. With today’s surge, gold has reached its highest level since late April, when the upward trend paused after hitting the $3,500 mark.

This year’s dollar sentiment has taken a hit amid ongoing turbulence in US policy and unclear communications. Additionally, many investors are hesitant to stick with the dollar and US assets, especially with Trump threatening the Fed’s independence.

Gold is becoming even more attractive as a result, with other factors like central banks in play.

Inflation data bolstered expectations that the Fed might cut interest rates this month, and markets are also wary of new US trade uncertainties after a US court ruled last Friday that President Trump’s global tariffs were largely illegal. Last week, various US economic reports, including GDP and Initial Jobless Claims, supported the dollar and pressured commodity prices.

The US GDP grew at an annual rate of 3.3% in Q2, up from the initial estimate of 3.0%, according to the US Bureau of Economic Analysis (BEA) on Thursday.

However, the U.S. Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, remained above the target in July, yet traders still hope for a rate cut. Gold continues to support expectations of Fed rate cuts, as lower rates could decrease the opportunity cost of holding gold.