Gold prices approached a three-month peak on Monday as trade frictions between the U.S. and Canada and renewed fiscal policy concerns lifted the precious metal. Spot gold fell 0.4% to $4,634.20 per ounce by 06:41 GMT, paring earlier gains, while gold futures declined 0.2% to $4,691.14.
The advance follows a late-June low near $3,942, which analysts now view as a base after gold’s early-August rally. That rally was initially driven by optimism over a potential diplomatic breakthrough in the Middle East, which eased oil prices and reduced pressure on central banks to tighten monetary policy, according to Tony Sycamore, senior market analyst at IG.
U.S. Treasury Secretary Scott Bessent indicated last week that the department plans to at least double long-term government bond buybacks, a move that has revived concerns over fiscal sustainability and the dollar’s purchasing power. The policy shift has bolstered alternative assets, including gold, reinforcing the so-called debasement trade.
Trade tensions escalated after Washington imposed a 50% tariff on certain Canadian products, with threats to extend the rate to Canadian cars, trucks, and auto parts starting January 2027. The White House also signaled further economic penalties for countries maintaining business ties with Iran, adding to geopolitical uncertainty.
Economic data releases this week may influence the Federal Reserve’s policy path. The Bureau of Economic Analysis is scheduled to publish the Personal Consumption Expenditures price index on Wednesday, followed by remarks from Fed Chair Kevin Warsh at the Jackson Hole symposium on Friday.
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