By: Economy Middle East

Gold moved higher above $4,600 an ounce on Thursday as concerns over the U.S. dollar and federal finances continued to support bullion, while investors prepared for Federal Reserve Chair Kevin Warsh’s closely watched Jackson Hole address.

Spot gold gained 0.18 percent to $4,606.1 an ounce by 07:18 GMT on August 27, while U.S. gold futures rose 0.15 percent to $4,660.14. 

The advance leaves bullion approaching a key technical level near $4,700 after a sharp recovery during August, but investors remain cautious as persistent U.S. inflation keeps the possibility of additional interest-rate increases alive.

In the UAE, gold rates rose on Thursday morning, with 24-carat gold gaining AED2.25 to AED556.50 per gram and 22-carat gold increasing AED2 to AED515.25.

In addition, 21-carat gold rose AED1.75 to AED494, while 18-carat gold gained AED1.75 to AED423.50.

Meanwhile, 14-carat gold increased AED1.25 to AED330.25.

Gold gained more than 5 percent last week after the U.S. Treasury expanded its buybacks of older long-dated government bonds. The move revived investor concerns about the longer-term value of the dollar and contributed to renewed demand for bullion. 

The U.S. dollar was little changed on Thursday. A weaker dollar generally provides support for gold because it reduces the cost of dollar-denominated bullion for investors using other currencies.

Gold had already climbed to a more than three-month high last Friday, when spot prices reached as much as $4,631.99 and recorded their third consecutive weekly gain. The rally also pushed bullion back above its 200-day moving average.

Warsh takes focus

Attention is now turning to Warsh’s keynote remarks at the annual Jackson Hole Economic Policy Symposium in Wyoming on Friday, August 28. The Federal Reserve calendar lists his speech for 10 a.m. local time. 

Wong said investors are looking to the speech for greater clarity on how the Federal Reserve intends to navigate the current economic environment.

He said that if Warsh does not provide clear forward-looking guidance, current market expectations surrounding possible rate increases are unlikely to change substantially.

Interest-rate expectations remain one of the biggest constraints on gold’s next move.

Markets were pricing a 38.1 percent probability that the Fed will raise rates in September and a 73.6 percent probability of an increase by December, according to CME FedWatch data cited by Reuters.

Higher interest rates typically weigh on gold because bullion does not generate interest income.

Inflation complicates outlook

Those rate expectations received additional support from the latest U.S. inflation figures.

The Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred measure of inflation, increased 3.7 percent in the 12 months through July, unchanged from June and remaining well above the central bank’s 2 percent target.

Core PCE inflation, which excludes food and energy, stood at 3.3 percent year on year. Both headline and core prices increased 0.2 percent from June.

The failure of annual inflation to decline in July has intensified the debate over whether the Fed should keep rates unchanged or resume tightening. Inflation has remained above the Fed’s target for 65 consecutive months. 

The latest data slightly increased market expectations for another increase in borrowing costs. 

For gold, that creates a tension between persistent inflation, which can strengthen demand for a store of value, and higher interest rates, which raise the opportunity cost of holding a non-yielding asset.

$4,700 barrier emerges

Linh Tran, market analyst at XS.com, identified the $4,700 area as an important near-term resistance level.

She said gold may need to spend some time consolidating between approximately $4,500 and $4,700 before it can establish enough momentum for another significant move higher. 

At Thursday’s reported spot price of $4,618.93, bullion was roughly 1.8 percent below the $4,700 level.

The technical hurdle follows a powerful recovery from July, when gold finished the month at around $4,027 an ounce after repeatedly testing the $4,000 level, according to the World Gold Council’s July market commentary. 

The rebound has therefore taken gold approximately $590 higher from its end-July level in less than a month, although prices remain below the record levels reached earlier in 2026.

Record remains distant

Gold’s extraordinary 2026 trading range continues to influence expectations about how quickly the metal can move when macroeconomic conditions shift.

Bullion reached a record $5,595 an ounce in late January before retreating sharply as changing rate expectations, the Middle East conflict, inflation pressures and a stronger dollar altered investor positioning. 

A Reuters survey of 29 analysts published in late July produced a median gold-price forecast of $4,509 an ounce for 2026, down from $4,916 in the previous poll. The median 2027 forecast was reduced to $4,610 from $5,100. 

The pullback in forecasts followed the large correction from January’s peak, but analysts continued to identify central-bank purchases, concerns about fiscal sustainability, geopolitical uncertainty and currency debasement as longer-term sources of support. 

At $4,618.93, gold remains about 17 percent below its January record.

Bank forecasts diverge

Major financial institutions nevertheless continue to see substantial upside under certain macroeconomic scenarios.

J.P. Morgan Global Research said in its 2026 midyear outlook that gold could still reach $6,000 an ounce by December, although the forecast has become increasingly dependent on how interest-rate expectations evolve.

The bank said the longer-term factors supporting precious metals — including concerns about currency debasement, fiscal risks and geopolitical fragmentation — remain largely intact, but the prospect of Fed rate increases has restrained investor engagement.

That reflects how dramatically the outlook has changed during the year.

In early July, JPMorgan had said weaker demand could constrain gold to around $4,300 in the third quarter and $4,500 in Q4, with downside risks if stronger economic data encouraged earlier Fed tightening.

The latest rebound has already moved spot prices above that earlier Q4 estimate.

Structural case remains

J.P. Morgan’s more recent research continues to emphasize that gold’s structural investment case has not disappeared despite the sharp swings in 2026.

Its dedicated gold outlook points to central-bank reserve diversification, geopolitical fragmentation and investor concerns about inflation and currencies as factors that could continue supporting the metal over the longer term. 

J.P. Morgan Private Bank has separately identified a 12-month gold target range of $5,700 to $6,000, arguing that the recent weakness can offer an entry opportunity if investors refocus on longer-term fundamentals. 

Those projections remain highly dependent on the Fed.

Warsh’s Jackson Hole appearance is therefore important because any indication that policymakers are comfortable allowing rates to remain unchanged could reduce one of the principal headwinds facing bullion.

A more hawkish message could instead strengthen yields and the dollar and put renewed pressure on gold.

gold price forecast

Central banks keep buying

Central-bank demand remains another pillar supporting the market.

The World Gold Council said central banks purchased a net 289 tonnes of gold during the second quarter of 2026, more than five times the revised first-quarter level and 62 percent above Q2 2025.

The total represented a record for a second quarter.

First-half central-bank demand reached 345 tonnes, however, its lowest H1 level since 2022 because purchasing had slowed sharply during the opening quarter.

The World Gold Council said geopolitical uncertainty, softer gold prices and a continued desire among reserve managers to diversify their holdings likely supported renewed buying during Q2.

Its 2026 survey of central banks also showed that official institutions remain broadly committed to gold following an average of around 1,000 tonnes of annual purchases during the previous four years.

Demand value hits record

Overall gold demand has remained substantial despite the elevated price environment.

Total demand, including over-the-counter transactions, reached 1,269 tonnes during the second quarter and 2,522 tonnes during the first half, up 2 percent from a year earlier.

The value of H1 demand reached a record $380 billion.

The average LBMA afternoon gold price stood at $4,506.29 an ounce during Q2, 37 percent above the corresponding period of 2025 but 8 percent below the record quarterly average set during Q1. 

Investment flows were less consistent. Gold-backed exchange-traded funds recorded net outflows of 45 tonnes in Q2, while bar and coin demand totaled 307 tonnes.

High prices also pushed jewelry consumption down to 278 tonnes, its lowest quarterly level since the pandemic. 

The World Gold Council expects investment to remain the main source of gold-demand growth during the remainder of 2026, with increasing support from over-the-counter activity and Asian investors. 

Central banks are expected to remain significant buyers, although annual purchases could finish below 2025 levels. 

In the U.S., ETF demand has shown particular sensitivity to interest rates.

The World Gold Council said U.S.-listed physically backed gold ETFs experienced concentrated selling during March and June rather than a continuous withdrawal from the asset.

That sensitivity makes Warsh’s interest-rate message particularly relevant to whether institutional investment flows support the August rally or begin to reverse again.

Geopolitics offers support

Geopolitical risk remains another variable supporting bullion.

Qatar’s Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani is expected to visit Tehran as Doha seeks to restart diplomatic efforts following renewed tensions between Washington and Iran.

The diplomatic push comes after months of conflict in the Middle East that have influenced energy prices, global inflation expectations and safe-haven demand.

Gold traditionally benefits during periods of political or financial instability because investors use it as a store of value outside conventional currencies and sovereign debt.

However, the unusual market environment of 2026 has shown that geopolitical stress does not automatically translate into continuously higher bullion prices.

Energy-driven inflation resulting from Middle East disruptions has simultaneously increased the risk of tighter Federal Reserve policy, producing a competing headwind for gold.

Other metals advance

Other precious metals also moved higher on Thursday.

Spot silver gained 1.03 percent to $68.75 an ounce, while platinum rose 0.15 percent to $1,844.50. Meanwhile, palladium decreased 0.21 percent to $1,324.00.

Silver’s gain again outpaced gold, extending a year of significant volatility across the precious-metals complex.

For gold, however, the immediate test remains the combination of the $4,700 resistance level and Warsh’s first Jackson Hole keynote as Fed chair.

The metal has already recovered substantially from its July levels and remains supported by fiscal concerns, geopolitical uncertainty and continued official-sector buying.