Gold Soars as Markets Await US Inflation Data and Fed Signals

Gold prices have been climbing steadily since last week's announcement by the US Treasury Department that it would support gold buybacks, making greenback-priced bullion more affordable for foreign investors. This has pushed the dollar lower and contributed to a 1% increase in spot gold to $4,649.08 per ounce as of 1004 GMT on Monday.

The price of gold has not been this high since May 15, and analysts believe that it may continue to rise if the dollar remains under pressure and Treasury yields stabilize or decline further. According to Ricardo Evangelista, a senior analyst at ActivTrades, 'the consolidation of gold prices above $4,600, and the potential for further gains, will depend to a large extent on the US dollar remaining under pressure and Treasury yields stabilizing at current levels or declining further.'

The market is now waiting with bated breath for the release of the July Personal Consumption Expenditure price index on Wednesday and Federal Reserve Chairman Kevin Warsh's speech at the Jackson Hole Symposium on Friday. These events are expected to provide valuable insights into policymakers' views on interest rates, which could have a significant impact on gold prices.

The current market sentiment is that there is only a 36% chance of a rate hike in September, with a 64% chance of the Fed leaving rates unchanged, according to the CME FedWatch Tool. However, higher interest rates tend to diminish bullion's appeal due to its non-yielding characteristic.