Gold is on track for a third weekly gain, with prices around $4,530 an ounce, and is expected to close the week more than 3% higher. This surge is largely attributed to the US Treasury's surprise liquidity injection on Wednesday, which led to lower yields and a weaker dollar, consequently boosting bullion. Treasury Secretary Scott Bessent further indicated on Thursday that he is prepared to expand buybacks of costlier debt, and the administration plans to unveil a fiscal initiative to address high borrowing costs.
While bond yields recovered some of their earlier declines, the Treasury's actions highlight concerns over increasing government debt. This sentiment aligns with a broader trend that has previously fueled gold's multi-year rally, as investors seek safe havens amidst economic uncertainties. Gold has maintained its position above the key $4,000-an-ounce support level since mid-July, after a war-induced slump briefly pushed it into bear market territory.
Despite the recent rally of approximately 11% this month, gold's upward momentum could face headwinds from a rebound in energy prices. Rising oil prices, influenced by US President Donald Trump's threats against Iran and potential disruptions to the Strait of Hormuz, could reignite inflation concerns and strengthen the case for future rate hikes. Currently, spot gold is up 0.2% to $4,522.90 an ounce, and the Bloomberg Dollar Spot Index is 0.1% lower. Silver, platinum, and palladium also recorded gains.
