Gold holds gain as Japan’s yen intervention weighs on US dollar

July 31, 2026 / Liam Redmond /

Wave of dip-buying has helped to keep gold above the key level of US$4,000 an ounce

Published Fri, Jul 31, 2026 · 09:05 AM

GOLD held a two-day gain, supported by a sharp decline in the US dollar after Japan intervened to bolster the yen.

Bullion was near US$4,100 an ounce in early trading on Friday (Jul 31), on track for its first monthly gain since February.

The metal has also been broadly supported this week by the US Federal Reserve’s decision to leave interest rates unchanged, despite inflationary pressures from the war in the Middle East. Higher borrowing costs are a headwind for precious metals, which do not pay interest.

The US dollar’s near-1 per cent decline against a basket of currencies on Thursday, a result largely of the Bank of Japan’s intervention to prop up the yen ahead of a policy decision due on Friday, made gold that is priced in the US currency cheaper for most buyers.

Commenting on the yen, US Treasury Secretary Scott Bessent said in an interview with US media that the Japanese currency is “very undervalued” and that he believes “excess volatility” is not healthy.

Fed’s decision to keep interest rates steady offers further support

Gold is down by more than a fifth since the US-Iran war began in February, with high energy prices stoking inflationary pressures and raising the likelihood that rates will stay higher for longer. A wave of dip-buying, however, has helped to keep the metal above the key level of US$4,000 an ounce in recent weeks, and it remains on track for a monthly gain of more than 2 per cent.

The US Fed’s decision on Wednesday to keep interest rates steady offered further support, particularly as some traders had earlier bet on a hike. But the 9-3 vote in favour of leaving borrowing costs unchanged also revealed conviction among some policymakers that a rise will eventually be needed to meet the US central bank’s inflation target of 2 per cent.

US Fed chairman Kevin Warsh insisted the latest decision was not a sign of inertia at the US central bank, saying: “If inflation continues to be elevated through the forecast period, interest rates could well be part of that solution, but I wouldn’t say it’s in isolation.”

The messaging from Warsh “is that inflation is not alarming, outside of the energy price effect,” said Helen Amos, an analyst at BMO Capital Markets. The “market’s assessment of inflation might be past its peak,” she said, adding that the Jackson Hole Economic Policy Symposium in late August – where the US Fed chair often delivers a major policy address – may be the next big catalyst for gold.