Gold Hits 3-Month High on Weakened Dollar and Fed Bets

Gold prices reached their highest level in over three months on Monday, as the US dollar weakened and investors sought safe-haven assets. Spot gold rose by about 0.8% to $4,641.27 an ounce in Asian trading, while US futures advanced to around $4,697.70.

The dollar's decline has been a major factor contributing to gold's recent rally, with the Treasury's decision to expand buybacks of longer-dated securities fueling concerns about debt sustainability and the purchasing power of the dollar.

Analysts believe that the Treasury move has revived concerns about inflation and the Fed's ability to control it, which is why investors are turning to assets like gold and Bitcoin. Marc Chandler, managing director at Bannockburn Global Forex, noted that gold's technical position has strengthened with its move above $4,600.

However, some analysts caution that momentum in gold prices has become stretched after the rapid advance. The rally now faces a more conventional macro test with this week's inflation data and Federal Reserve Chair Kevin Warsh's address at the Jackson Hole Economic Policy Symposium on Friday, August 28.