Gold reaches 3-month high ahead of U.S. inflation data, Fed speech

Gold prices hit their highest levels in more than three months on Monday as a subdued dollar lent support, while focus shifted to key U.S. inflation data and a speech later this week by Federal Reserve Chair Kevin Warsh.

Spot gold was up 0.5% at $4,627.42 per ounce, as of 0155 GMT, after hitting its highest level since May 15 earlier in the session. Prices gained more than 5% last week.

U.S. gold futures edged 0.1% higher to $4,683.80.

A wavering dollar teetered near multi-month lows in a market unsettled by the U.S. Treasury’s promise to buy back more long bonds. A weaker U.S. dollar makes greenback-priced bullion more affordable for holders of other currencies.

Gold is looking spritely to start the week and has stepped back into bid mode and is taking its cues primarily from the softer dollar and focusing more on what higher yields may be signaling about underlying economic strains and policy uncertainty, said Tim Waterer, chief market analyst at KCM Trade.

The July Personal Consumption Expenditures (PCE) price index data and Fed Chair Warsh’s speech at the Jackson Hole symposium this week will be watched for fresh clues on the U.S. interest rate outlook.

“Traders will be listening closely for any shift in tone on the policy path and how it sits with recent bond-market developments. A balanced or cautious tone that leaves room for flexibility would likely keep the door open for gold to extend its gains,” Waterer added.

On the geopolitical front, the U.S. threatened Iran with what it called “the greatest financial offensive ever marshalled” as it prepared to roll out economic sanctions that target Iran’s trade partners. Oil prices slipped more than $1 a barrel as investors took profits ahead of the expected announcement.

Among other metals, spot silver fell 0.3% to $68.76 per ounce. Platinum lost 0.5% to $1,868.03 while palladium was down 0.3% at $1,345.87.