Gold traded slightly lower on Wednesday but stayed near its strongest level in more than three months, as investors positioned ahead of the latest US inflation data and a closely watched Federal Reserve speech. Spot gold changed hands around $4,627 an ounce in later Asian trading after nearing $4,700 earlier in the week, while US futures hovered near $4,684 to $4,699 per ounce. The metal has posted a strong August, with gains of roughly 15% for the month and more than 7% over the past week.
The rally has been driven by a softer dollar, falling Treasury yields, renewed demand for hard assets and the US Treasury’s decision to expand buybacks of longer-dated debt. The buyback programme will at least double long-end liquidity-support operations from $2 billion to $4 billion starting September 9. Investors have interpreted the move through the lens of rising government debt and pressure on long-term borrowing costs, reviving the so-called debasement trade that supported gold’s record-breaking rally in 2025.
Now the first major test arrives with the Personal Consumption Expenditures price index, scheduled for 8:30 am ET on Wednesday. Economists expect headline PCE inflation to ease to about 3.6% from 3.7% in June, while core PCE is forecast to slow to 3.2% from 3.3%. Barclays economist Pooja Sriram expects core prices to rise 0.2% month over month, a pace that may still be too quick for the Federal Reserve to declare victory but may not require an immediate rate increase.
Futures markets currently assign roughly a 62% probability to the Fed leaving interest rates unchanged in September. A soft inflation reading could pull real yields lower and weaken the dollar, reducing the opportunity cost of holding non-yielding bullion. A hotter print would likely revive the opposite trade and strengthen the case for a more cautious stance.
Other market forces are also supporting gold. Oil prices fell after Iran and Oman held talks on a temporary joint maritime corridor that could allow some shipping through the Strait of Hormuz to resume. Lower energy costs ease inflation pressure and reduce the need for aggressive Federal Reserve policy. Treasury yields fell by around five to seven basis points across the curve on Tuesday. The US Dollar Index traded near 98.9 to 99.01, close to multi-month lows. Boston Fed President Susan Collins said she supports holding rates steady for now as long as inflation continues moving toward the central bank’s 2% target.
Attention now shifts to Fed Chair Kevin Warsh’s keynote at Jackson Hole on Friday at 10 am ET, his first major symposium speech since taking the role. Markets are hoping for clearer guidance on how the central bank is weighing inflation against weaker employment data and tighter financial conditions. Wells Fargo Investment Institute’s Mason Mendez said resilient global demand, renewed central-bank purchases and geopolitical uncertainty continue to support gold, with a 2026 target of $4,900 to $5,100. ANZ Research analysts noted that uncertainty around the interaction between Treasury debt management and monetary policy has kept demand for gold elevated even as Treasury yields remain relatively high.
For cryptocurrency markets, the same macro backdrop matters. Lower yields and a softer dollar can support risk appetite across digital assets, while a hotter-than-expected PCE print or a hawkish Jackson Hole tone could trigger a risk-off reaction.
