Gold Soars to 3-Month High as Dollar Weakness Fuels Bullion Demand

Gold prices have surged to their highest level in over three months as the US dollar continues to weaken. Spot gold rose by about 0.8% to $4,641.27 an ounce in Asian trading on Monday, while US futures advanced to around $4,697.70.

The dollar's decline has been attributed to the Treasury's decision to expand buybacks of longer-dated securities, which has raised concerns about debt sustainability and the purchasing power of the dollar.

According to Marc Chandler, managing director at Bannockburn Global Forex, gold's move above $4,600 has strengthened its technical position. He sees a convincing extension above that level potentially opening the way towards around $4,680.

The rally in gold prices now faces a crucial test with the release of July personal income and spending figures, including the PCE price index, on Wednesday. The Fed's upcoming policy signal will also be closely watched, particularly after the central bank showed greater concern about inflation at its last meeting.