Gold Pulls Back From Three-Month High Ahead of U.S. Inflation Data and Warsh Speech

Gold Pulls Back From Three-Month High Ahead of U.S. Inflation Data and Warsh Speech

Fiona Craig

Tue, August 25, 2026 at 12:33 PM GMT+3 3 min read

Gold prices edged lower on Tuesday after reaching their highest level in more than three months earlier in the session, as some investors locked in profits ahead of key U.S. inflation figures and Federal Reserve Chair Kevin Warsh's upcoming speech.

At 01:00 ET (05:00 GMT), XAU/USD was down 0.3% at $4,688.96 an ounce, while gold futures gained 1.0% to $4,746.09. XAG/USD rose 0.8% to $69.51 an ounce and XPT/USD advanced 0.5% to $1,889.32. The U.S. Dollar Index was broadly unchanged at 98.98.

Treasury Buybacks Keep Dollar and Fiscal Concerns in Focus

Despite Tuesday's modest retreat, gold remains sharply higher following a rally that carried the precious metal to a more-than-three-month peak.

The latest leg of the advance followed strong gains last week after the U.S. Treasury announced plans to at least double its purchases of longer-dated government debt. The move revived concerns about U.S. fiscal policy, the future purchasing power of the dollar and growing demand for alternative stores of value.

Treasury intervention pushed government bond yields lower and weakened the dollar, making dollar-denominated gold less expensive for buyers using other currencies. It also raised questions among investors about the sustainability of U.S. public finances and whether attempts to directly restrain borrowing costs could undermine confidence in the currency.

Treasury Secretary Scott Bessent has indicated that he is prepared to increase purchases of longer-maturity debt, although he provided no new indication on Monday that further measures were imminent. He has also said the administration plans to announce a fiscal initiative aimed at tackling elevated government borrowing costs.

The policy shift has brought renewed attention to the so-called debasement trade, which contributed to gold's approximately 65% advance in 2025.

Investors adopting this strategy are effectively using gold as protection against the possibility that expansionary fiscal policy and easier financial conditions could erode the dollar's purchasing power over the longer term.

Attention is now shifting towards upcoming U.S. inflation figures and Warsh's first Jackson Hole speech. Softer inflation could strengthen expectations for easier Federal Reserve policy, while a more hawkish message could create pressure for non-yielding assets such as gold.

Iran Sanctions and Trade Friction Support Diversification Demand

Geopolitical and trade uncertainty are also contributing to demand for portfolio diversification.

Washington has threatened economic penalties against countries that continue to conduct business with Iran as part of its efforts to isolate Tehran. Meanwhile, tensions between the U.S. and Canada have intensified following the breakdown of trade negotiations, with Washington imposing 50% tariffs on some Canadian products and threatening equivalent duties on Canadian cars, trucks and automotive components from January 2027.

These developments are putting gold's traditional role as a portfolio diversifier back in focus as investors navigate fiscal uncertainty, trade disputes, geopolitical tensions and questions over the direction of monetary policy.

Tony Sycamore, senior market analyst at IG, said the recent price action strongly suggests gold has established a base around its late-June low near $3,942.

Sycamore said gold's initial August advance was partly driven by hopes of a diplomatic breakthrough in the Middle East, which could have pushed oil prices lower and reduced pressure on central banks to raise interest rates.

That scenario did not materialise, but gold continued to advance as renewed interest in the debasement trade following the Treasury's intervention provided another catalyst.

According to Sycamore, gold has now moved above trendline resistance near $4,420 and its 200-day moving average around $4,515, improving the technical outlook. He expects buyers to emerge on price declines as attention turns towards the next significant resistance area between $4,900 and $5,000.

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