Gold surges to 3-month high amid Iran tensions, Fed watch

Gold prices climbed to their highest level in more than three months on Monday, driven by a weakening US dollar, escalating geopolitical tensions in the Middle East, and investor positioning ahead of key economic data releases later this week.

Spot gold rose approximately 0.7% to trade around $4,636–$4,641 per ounce, its highest since mid-May, following a sharp 5% gain last week. US gold futures hovered near $4,697 per ounce. In India, MCX gold futures rose 0.65% to ₹163,870 per 10 grams.fortuneindia+1

Catalysts Behind the Rally

Markets are closely watching the upcoming July Personal Consumption Expenditures price index — the Federal Reserve's preferred inflation gauge — alongside Fed Chair Kevin Warsh's remarks at the Jackson Hole symposium for signals on the trajectory of US interest rates.thenews

A subdued US dollar, sliding near multi-month lows following the US Treasury's decision to double its long-term bond buyback program to $4 billion per session, has made dollar-priced bullion more affordable for international buyers. The buyback initiative triggered aggressive short-covering and speculative buying in precious metals markets.indexbox+1

Geopolitical tensions have intensified safe-haven demand. US Treasury Secretary Scott Bessent announced new economic sanctions against Iran, writing on X that "at dawn begins an economic D-Day — the single greatest financial offensive ever marshaled against an adversary." Tehran warned it would not allow "a single drop of oil" through the Strait of Hormuz.fortuneindia

Broader Precious Metals Rally

The rally extends beyond gold. Silver has surged 19% in August while gold has gained 15%, together adding nearly $5 trillion in market value, according to an analysis by Bull Theory cited by Yahoo Finance. Silver's outperformance reflects an acute physical supply deficit compounded by industrial demand from AI data center infrastructure, electrical grid modernization, and advanced electronics.indexbox

Record US public debt of $40 trillion, 19-year high long-term bond yields, and fresh trade frictions have pushed precious metals back into focus as potential inflation hedges.simplywall

Analyst Outlook

Tim Waterer, chief market analyst at KCM Trade, said gold "has stepped back into bid mode and is taking its cues primarily from the softer dollar." He added that "a balanced or cautious tone that leaves room for flexibility would likely keep the door open for gold to extend its gains".thenews

Truist Chief Investment Officer Keith Lerner recently upgraded his view on gold, citing stabilized real yields, resilient central bank demand, and a softer dollar backdrop supported by cooling inflation and a dovish Federal Reserve hold.indexbox