Gold eyes best monthly gain since 1999 as rally pauses near three-month high

Gold climbed to its highest level in more than three months on Tuesday before pulling back on profit-taking, capping a rally that UOB analysts say puts the metal on pace for its strongest monthly gain since September 1999.

A Rally Built on Dollar Weakness and Fiscal Fears

Spot gold touched its highest since mid-May earlier on Tuesday before easing, with prices hovering around $4,640 per ounce, according to Reuters. The metal has gained over 15% so far in August, driven by a weakening U.S. dollar and the Treasury Department's expanded bond buyback program, which has weighed on long-term yields and reduced the opportunity cost of holding non-yielding bullion.cnbc+1

Gold futures also traded near three-month highs, settling around $4,700. UOB analysts noted the August surge is on track to be gold's best monthly performance since September 1999, when a group of European central banks agreed to cap their gold sales.Investing.com+2

This time, the catalyst is different. The U.S. Dollar Index has fallen roughly 0.8% this month, making dollar-priced gold cheaper for foreign buyers. The Treasury's decision to double long-term bond buybacks has amplified concerns over U.S. debt sustainability, pushing investors toward hard assets.kucoin+1

Running in Tandem With Bitcoin

The gold rally has run in parallel with a surge in Bitcoin ↗ 0.04%, which briefly topped $81,000 on Tuesday — its highest since May. Both assets are benefiting from similar macro forces: a softer dollar, capped yields, and growing unease about U.S. fiscal policy.cnbc+1

A Strive executive recently pointed to Bitcoin's breakout against gold as evidence that the crypto asset's bear market has ended. Spot bitcoin ETF inflows have also accelerated, reinforcing the broader rotation away from traditional dollar-denominated assets.kucoin+1

All Eyes on Jackson Hole

Investors are now turning their attention to Federal Reserve Chair Kevin Warsh, who speaks ahead of this week's Jackson Hole symposium. Citi analysts said a dovish surprise would push markets to refocus on the "debasement trade," while a hawkish tone could stall both the gold and Bitcoin rallies.beincrypto+3

Gold retreated slightly on Tuesday as some traders booked profits ahead of the Fed signals and upcoming U.S. inflation data. Qatar News Agency reported spot gold fell 0.2% to $4,640.39 per ounce in Asian trading, suggesting the market is pausing to digest its gains rather than reversing course.qna