Gold rises towards $4,400 as weaker dollar supports prices despite Middle East inflation concerns
Fiona CraigMon, August 17, 2026 at 12:22 PM GMT+3 3 min read
Gold prices moved higher on Monday, remaining close to $4,400 an ounce as weakness in the U.S. dollar and softer economic indicators provided support, while uncertainty over Middle East energy supplies continued to pose an inflation risk.
At 01:04 ET (05:04 GMT), XAU/USD gained 0.5% to $4,399.44 an ounce, while Gold Futures advanced 0.4% to $4,455.90. XAG/USD climbed 1.7% to $65.83 an ounce and XPT/USD rose 1.8% to $1,749.15.
The US Dollar Index declined 0.2% to 99.49, making dollar-denominated precious metals relatively cheaper for buyers using other currencies.
Weak U.S. economic figures reduce expectations for a Fed hike
Gold entered the new trading week after gaining almost 1% over the previous week, helped by economic data that reduced concerns about an imminent Federal Reserve interest rate increase.
U.S. consumer sentiment declined for the first time in three months, while retail sales recorded their steepest monthly contraction in more than a year.
Those figures have eased some of the pressure on the Fed to tighten monetary policy. That backdrop is supportive for gold because the precious metal does not generate interest income and generally becomes relatively more attractive when expectations for borrowing costs decline.
ANZ analysts have also identified a strengthening inverse relationship between gold and U.S. Treasury yields, with higher borrowing costs exerting greater pressure on bullion.
The brokerage expects gold's trajectory over the coming year to unfold in three broad phases. It initially sees pressure from persistent inflation and a Federal Reserve that remains on hold, followed by an economic slowdown triggered by an energy shock and, eventually, stronger support as monetary policy becomes more accommodative.
ANZ also expects worsening international relations to sustain central-bank demand for gold as a diversification asset and forecasts the metal could reach $5,200 an ounce by the end of the year.
Investors will receive further insight into the Federal Reserve's thinking on Wednesday, when minutes from its July policy meeting are due to be released.
Hormuz disruption keeps inflation concerns elevated
Softer U.S. economic data have not eliminated the threat of renewed inflation. Several vessels were attacked in the Strait of Hormuz late last week, while the U.S. said it was preparing additional measures intended to increase economic pressure on Iran.
Ships have continued to leave the strategically important waterway, with some vessels reportedly switching off satellite transponders to reduce the likelihood of being detected.
Iran and Oman also appear to be making progress towards an agreement governing the management of the Strait of Hormuz, although the United States is not participating in those discussions.
The combination of shipping disruption, geopolitical tensions and tentative diplomatic progress continues to create significant uncertainty around global energy supplies.
A renewed increase in oil prices could add to inflationary pressures and complicate the Federal Reserve's ability to move towards looser monetary policy.
Central-bank buying provides additional support for gold
Gold's recovery above the important $4,000-an-ounce level has also been underpinned by stronger investor interest and increased purchases by central banks, particularly China.
Last week, bullion moved above its 100-day moving average for the first time since April and has remained close to that technical level.
According to ANZ, central banks purchased 244 tonnes of gold during the first quarter of 2026, the strongest quarterly buying since the fourth quarter of 2024.
China also accelerated its accumulation, purchasing 8 tonnes in April. That represented the country's largest monthly addition to its gold holdings since December 2024.
Gold price
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