Spot gold prices climbed 0.6% to $4,676.75 per ounce as of 0026 GMT, reaching their highest level since mid-May. This rise follows the U.S. Treasury Department's announcement to double liquidity support for longer-dated notes and bonds, which has bolstered investor confidence in the precious metal.
U.S. gold futures also saw an uptick, rising 0.8% to $4,734.50. The recent surge in gold prices comes after a sharp increase last week, driven by the Treasury's liquidity measures. Additionally, the upcoming U.S. Personal Consumption Expenditures report, a key inflation gauge for the Federal Reserve, is due on Wednesday, adding to market anticipation.
Citi has revised its short-term gold price target to $4,800 an ounce, maintaining a six-to-12-month target of $5,000. The bank cited factors such as easing tensions around the Strait of Hormuz, lower real interest rates, and a less hawkish Federal Reserve as reasons for the continued rally.
In other developments, the U.S. has expanded sanctions on Iran, aiming to cut off its economic lifeline without imposing the most severe measures. This geopolitical tension adds another layer of complexity to the global economic landscape.
Meanwhile, in Ghana, the artisanal gold marketing agency GoldBod has not funded its suppliers for up to three weeks, causing operational disruptions. This has forced some operators to halt purchases or seek loans to continue their business.
Background
Gold prices have been on an upward trajectory due to various global economic factors, including the U.S. Treasury's liquidity measures and geopolitical tensions. Historically, gold is seen as a safe-haven asset during times of economic uncertainty, which explains its current appeal.
As the market looks ahead, all eyes will be on Fed Chairman Warsh's debut speech at the Jackson Hole conference, where traders and analysts hope for insights into the recent bond yield increases and the Fed's stance on inflation.
