World gold prices rose to their highest level in more than 3 months in the first trading session of the week as the USD weakened, while the market focused on US inflation data and the speech of the Chairman of the US Federal Reserve (Fed) at the Jackson Hole conference.
In the trading session on August 24, spot gold prices at one point increased by 0.8% to 4,641.27 USD/ounce, the highest level since May 15. This upward momentum continued the previous positive trading week when the precious metal had increased by more than 5%.
Gold futures in the US also increased slightly, to 4,697.70 USD/ounce. The positive development of gold is supported by the weakening USD as the greenback fluctuates near a multi-month low.
As the USD depreciates, gold - which is valued in this currency - becomes more attractive to investors holding other currencies. This is one of the important factors driving buying power in the precious metals market in recent times.
Besides the monetary factor, the gold market is turning its attention to new signals about US interest rate policy. The US Personal Consumption Price Index (PCE) data for July, expected to be released this week, is considered one of the important information to help investors assess inflation prospects.
PCE is an inflation measure closely monitored by the Fed in the process of monetary policy making. If data shows that price pressure is reduced, expectations of a possible interest rate adjustment may increase, thereby creating more momentum for gold.
In addition to economic data, Fed Chairman Kevin Warsh's speech at the Jackson Hole conference also attracted special attention from the market. Investors are waiting for signals related to interest rate orientation in the near future, especially in the context of the US bond market showing many fluctuations.
A cautious policy stance but still leaving open the possibility of flexible adjustments may continue to support gold prices. Conversely, if the Fed sends a signal to maintain a tight monetary policy for longer, the precious metal may be under pressure due to bond yields and increased opportunity costs to hold gold.
Besides economic factors, new developments on the geopolitical front also contribute to market sentiment. Economic sanctions related to Iran are being monitored, while oil prices are falling by more than 1 USD/barrel as investors take profits in anticipation of new information.
For gold, the current upward trend is being strengthened by a combination of many factors including the weakening USD, expectations about US monetary policy and the need to hedge against risks in the context of a still volatile global economy.
However, developments this week may depend heavily on US economic data and policy messages from the Fed. Changes in interest rate expectations may create new fluctuations for gold prices in the short term.
In other precious metal groups, spot silver prices moved sideways around 68.98 USD/ounce. Platinum prices increased slightly to 1,878.88 USD/ounce, while palladium remained almost unchanged, maintaining around 1,350 USD/ounce.
The article updates the developments of the gold market, not investment recommendations. Investors need to carefully consider risk factors before making a decision.
