Monetary Policy Uncertainty Pushes Gold Above $4,450

Bloomberg – Gold prices benefited from rising uncertainty surrounding U.S. economic policy, rebounding toward $4,450 per ounce. Bank of America stated that a continued rise toward $5,000 per ounce would require a faster acceleration in investment demand and a return of flows into gold-backed exchange-traded funds.

In a report, the bank said the recent gold rally coincided with growing uncertainty regarding the U.S. policy mix. The metal moved closely against the euro versus the dollar, as investors reassessed their expectations for monetary policy, fiscal sustainability, and exchange rate management.

It added that debates over supporting the Treasury bond market and central bank independence reflect increasing interplay among interest rates, liquidity, and government finance—an environment in which gold typically benefits when economic policy signals become harder to interpret.

Attention now turns to U.S. personal consumption expenditures data on August 26, followed by the Jackson Hole symposium from August 27 to 29, and the Federal Reserve’s September 16 meeting, which the bank considers the key milestone for determining the metal’s direction. It noted that any shift toward a more accommodative monetary policy would be positive for gold.

The report clarified that the average gold price has reached $4,360 per ounce since the beginning of the year, coinciding with a 7.3% year-on-year growth in investment demand.

Despite demand holding up at high price levels, Bank of America’s model suggests that the current pace of investor purchases aligns more closely with a price near $4,000 per ounce, while reaching the $5,000 level would require growth in demand.

Bank of America believes that strengthening the link between gold trading and yuan-denominated pricing, clearing, and settlement could gradually help China expand alternatives to the dollar-centric financial system.