Gold hits fresh high since mid-May as lower bond yields and fading Fed bets undermine USD

Gold has reached a new high since mid-May, climbing above $4,650 during the Asian session on Monday. The US Dollar (USD) is struggling near its lowest level in over three months due to reduced expectations of an immediate interest rate hike by the Federal Reserve (Fed) and lower US Treasury bond yields. These factors are helping the non-yielding gold.

In July, US inflation data was less severe than expected, suggesting a possible pause in Federal Reserve policy tightening at the September 15–16 Federal Open Market Committee (FOMC) meeting. US Treasury Secretary Scott Bessent indicated a willingness to intervene more aggressively as bond yields rose above previous levels. The Treasury announced it would double buyback operations for long-dated government debt starting in September, keeping yields suppressed below a multi-year peak.

Despite a 70% chance of a Fed rate hike this year due to inflation risks from volatile oil prices, the focus now shifts to the release of the US Personal Consumption Expenditures (PCE) Price Index on Wednesday. Fed Chair Kevin Warsh's speech at the Jackson Hole Symposium may provide insight into the central bank's future policy direction, while geopolitical uncertainties could bolster the safe-haven dollar.

US Treasury Secretary Bessent will announce tougher sanctions on Iran at a press conference, which may limit downside for the Greenback and keep gold prices stable. The next resistance level for gold is near $4,684.43, followed by a potential test of the cycle high at $4,891.38. Support is seen at the 61.8% Fibonacci retracement level at $4,521.97, reinforced by the 200-day SMA and deeper structural floors at the 50% retracement at $4,407.86 and the 38.2% level at $4,293.75.