FX.co ★ XAU/USD, GOLD

XAU/USD Gold prices have continued to rise, hitting their highest point in almost three months before marginally declining from those peaks. With a declining U.S. dollar acting as a significant tailwind for the precious metal, the move is a continuation of the rally that started last week. Since gold is valued in dollars, a weaker dollar often makes the commodity more accessible to buyers abroad, which might boost demand. The most recent increase, however, comes at a crucial moment for markets as investors get ready for two events that could influence expectations for U.S. monetary policy: Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole Symposium on Friday and the release of the July Personal Consumption Expenditures (PCE) price index on Wednesday. We'll be keeping a careful eye on the July PCE data for any new information about the trajectory of US interest rates. The information is especially crucial for gold traders, as inflation is still one of the primary factors influencing the Federal Reserve's ability to modify monetary policy. Expectations that the Fed has more room to cut interest rates might be strengthened by a lower-than-expected inflation figure. By increasing the pressure on the dollar and possibly lowering the opportunity cost of owning a non-yielding asset, such a situation might promote gold. On the other hand, indications that inflation is still ongoing may cast doubt on plans for looser monetary policy. A higher inflation rate may boost the currency and Treasury rates, making the market more challenging for gold following its recent increases.