Gold (XAU/USD) reached a new high in mid-May, trading above the round-number level of $4,600.

Reduced expectations of an imminent Federal Reserve (Fed) interest-rate hike, together with lower Treasury yields, is keeping the US dollar near a three-month low and supporting the positive outlook for the precious metal.

Moderate US inflation data for July reduced expectations of tighter Fed monetary policy in the near term. As a result, market expectations have shifted toward maintaining the current policy stance at the upcoming FOMC meeting on September 15–16. Moreover, US Treasury Secretary Scott Bessent has indicated an intention to conduct more active interventions, as bond yields have risen from their levels before the buyback announcement. In particular, the US Treasury announced that starting in September, it would at least double the volume of its purchases of long-term government bonds. Bessent assured markets that purchases could exceed $4 billion per issuance. This is keeping US Treasury yields below multi-year highs and preventing the dollar from recovering.

Meanwhile, traders continue to assess the probability of at least one Fed rate hike by the end of the year at more than 70% amid inflationary risks associated with unstable oil prices.

Therefore, attention should be focused on the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index on Wednesday. Fed Chair Kevin Warsh's speech at the Jackson Hole symposium will also be assessed for signals regarding the central bank's future monetary policy, which in turn could have a significant impact on the dollar and gold prices. At the same time, geopolitical uncertainty could support the dollar as a safe-haven asset.

At a press conference on Monday, US Treasury Secretary Scott Bessent is expected to announce what he considers the strictest sanctions in history against Iran. In response, Mohsen Rezaei, Secretary of Iran's Supreme National Security Council, warned that the Islamic Republic would halt oil exports through the Strait of Hormuz and other Persian Gulf ports if the economic confrontation continues. Rezaei added that any country's participation in US sanctions would be regarded as an act of war against Iran. This supports the US dollar and limits its decline, putting downward pressure on gold prices and requiring caution from gold bulls.

From a technical perspective, Friday's close above the round-number level of $4,600 was viewed as a new signal for XAU/USD buyers. In addition, the MACD indicator remains in positive territory, with its readings continuing to rise, indicating that the upward trend is continuing. However, the Relative Strength Index (RSI) at 71.77 indicates overbought conditions, which could limit short-term gains. On the other hand, the first significant support is located at the 200-day SMA and the round-number level of $4,500. A deeper support level is at $4,450.

The table below shows the percentage change in the US dollar against major currencies today. The US dollar showed the greatest strength against the Canadian dollar.