Gold prices extended their gains to fresh multi-month highs during Asian trading on Monday as investors weighed several factors pressuring the United States dollar, including the Treasury's expanded bond buyback programme, renewed U.S.-Canada tariff tensions and looming sanctions against Iran.
By 4:25 pm AEST (6:25 am GMT), spot gold was up 0.9% at US$4,647.77 an ounce.
Gold has benefited from weaker demand for the U.S. dollar as investors reassess the U.S. economic outlook following a recent surge in Treasury yields and the government's commitment to increase purchases of longer-dated bonds.
Renewed trade tensions between the U.S. and Canada have also weighed on the dollar. Canadian Prime Minister Mark Carney said early Monday that Ottawa would impose retaliatory tariffs from September 8 after the U.S. introduced 50% tariffs on some Canadian products on Saturday.
Meanwhile, fading expectations of a Federal Reserve interest rate hike in September, following a series of weaker-than-expected U.S. economic indicators, have added further pressure on the dollar while supporting non-yielding assets such as gold.
Gold has also regained its traditional safe-haven appeal as tensions between the U.S. and Iran remain elevated. Washington threatened Iran with what it described as "the greatest financial offensive ever marshalled" as it prepared to introduce economic sanctions targeting the country's trading partners.
Iranian Foreign Minister Abbas Araghchi dismissed the threat of new U.S. sanctions as a sign of desperation on Sunday, saying the measures would fail to force Tehran to capitulate.
The next major catalysts for gold will be the U.S. July core Personal Consumption Expenditures (PCE) price index and Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium later this week.