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Gold rises in August as dollar slips and yields head lower

XAUUSD gained nearly 10% in August, supported by weaker USD and lower expectations for Fed tightening before any pullback driven by higher Treasury yields.

Reported · Written up by our desk · Precious Metals

Gold prices extended their recovery in August, rising by almost 10% as the US dollar logged its second straight month of losses, according to Action Forex. The outlet links the weaker USD to the Treasury’s intention to lower long-term Treasury yields, slowing inflation signals, a cooling labor market, and a reduced chance of additional Fed tightening.

At the turn of August and September, the probability of a federal funds rate hike at the next FOMC meeting jumped above 60%, allowing the US dollar to partially regain ground. Action Forex also points to market rumors that Kevin Warsh’s Jackson Hole remarks helped restore confidence, while the Treasury’s push to manage yields helped set up conditions that can benefit a so-called debasement trade.

Despite the August surge, gold could face pressure if investors return to Treasuries as yields rise. Action Forex notes that global debt yields have returned to levels last seen in 2008, with 10-year Treasury yields at their highest in 19 years, and it argues that gold, which does not pay interest, may struggle when rates climb.

The analysis also flags upside risks from renewed Middle East tensions, which pushed Brent crude above $90 per barrel and could raise inflation concerns. Action Forex says a key swing factor for XAUUSD could be whether confidence returns in the Fed Chair’s approach, citing views from Scott Bessent and Wells Fargo that point to less tightening and continued support for gold.

Latest closeGold $4,509.30 ▲0.7%|WTI crude $86.62 ▲3.9%|Brent $88.80 ▼0.6%

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