Gold prices surged to a 14-week high of $4,618.05 per ounce as of 5:50 am IST on Monday (August 24), marking a more than three-month high since May 15, 2026. As reported by ET Now, the rally was primarily driven by weaker US dollar expectations and steady Federal Reserve rate outlook. According to the CME FedWatch Tool, markets are pricing in around a 59% probability that the Fed would keep interest rates unchanged at its next FOMC meeting in September, providing additional support to bullion prices. The weaker USD makes gold cheaper for holders of other currencies, potentially boosting demand, while a softer dollar can also reflect expectations of easier monetary policy that tends to support non-yielding assets such as gold. The metal has staged a sharp 15% jump in just one month, marking its strongest rally in more than four months and putting it about 16% below its fresh peak of $5,500 that it touched earlier this year.
The precious metals rally has been supported by robust ETF flows and sustained central bank buying. According to The Economic Times, gold exchange-traded funds are seeing renewed demand, with 23 tonnes of gold added to global ETF holdings in recent periods. Flows have accelerated in August, with 45 tonnes added to global ETFs month-to-date, as reported by the World Gold Council. Central banks purchased 288.9 tonnes of gold in the second quarter, a 62% increase from a year earlier, with South Korea now joining the trend after returning to the gold market after 13 years. The World Gold Council's Central Bank Gold Reserves Survey found that 89% of respondents expect global reserves to rise over the next year, while a record 45% expect to increase their own holdings over the same period. Central bank demand is expected to remain above its long-term average, with the structural case for gold built around diversification, crisis performance and protection against geopolitical and financial risk.
The precious metals rally gained momentum from steady or lower interest rate expectations, with spot silver also trading above the $69-per-ounce mark after rising to a more than three-month high in the previous session. According to ET Now, steady or lower interest rates generally benefit gold by reducing the opportunity cost of holding the non-yielding asset. Expectations of a less hawkish Fed can provide additional support to bullion prices, as the Federal Reserve's preferred measure of inflation, the PCE Price Index, remains closely watched by gold investors. Traders are now pricing in a 61% chance that the Fed will keep rates unchanged next month, while the probability of a hike stands at 42%, according to the CME FedWatch Tool. A softer-than-expected inflation reading could strengthen expectations of an easier Fed policy and provide further support to gold, while a hotter reading could revive concerns over tighter monetary policy.
COMEX gold futures were up 0.47% to $4,702.70 per ounce during morning trade on August 24, while silver declined 0.69% to $69.05 per ounce according to Moneycontrol. The domestic MCX futures for October contract closed flat at ₹1,62,440 per 10 grams on Friday, with silver for September contract surging 1.28% to ₹2,46,360 per kilogram. The LBMA spot gold price stood at $4,582.10 per ounce in the PM fixing on August 20, while domestic spot gold on MCX surged towards ₹1,59,802 per 10 grams on Friday. Going forward, gold will take cues from bond prices, crude oil, and US-Iran developments, while Core PCE inflation and US GDP data will be key macro triggers for future price movements.
Billionaire investor John Paulson remains bullish on gold, arguing that "as people lose faith in paper currencies, gold as an alternative will continue to grow." Paulson, whose bet against subprime mortgages became one of the most profitable trades in Wall Street history, turned his attention to gold in 2009 and believes gold prices have roughly quadrupled since then. He argues that fiscal and monetary stimulus following the financial crisis would eventually weaken the US dollar. Christopher Wood in his Greed and Fear report said investors should once again begin accumulating gold and gold mining stocks after an extended pause, drawing parallels with the dot-com bust scenario. Wood believes gold is the second-best hedge for investors amid rising fiscal and geopolitical risks, with oil and energy stocks remaining the preferred hedge as economic pressure surrounding Iran continues to disrupt energy markets. Investment is expected to remain the principal source of demand growth through the rest of 2026, with increasing support from over-the-counter activity and Asian buying, while central banks are also expected to remain significant buyers.
