Gold prices extended their gains as they benefited from a softer US dollar. The currency retreated to a multi-month low, reducing pressure on the metal gradually.
While bond yields stabilized after the markets’ reaction to the US Treasury’s decision to increase the size of long-dated bond buybacks, attention could remain on upcoming operations that could weigh on yields, creating an opportunity for gold to recover.
The metal continued to benefit from softer monetary policy expectations over the short term.
Market bets point to a hold at the Federal Reserve’s September meeting, and gold’s recovery could extend if policy expectations soften further.
However, an interest rate hike is still expected by the end of the year, which could limit the upside potential for the metal. At the same time, markets continue to react to new economic data releases with officials focused on inflation levels.
Looking ahead, attention turns to PMI data later today as well as inflation and job market figures next week. Fed Chair Warsh’s Jackson Hole speech could affect the market’s direction and monetary policy expectations. Middle East developments and oil price levels could remain a source of risk.
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