Gold prices hit a three-month high, trading above $4,600 an ounce, as a softer US dollar and the US Treasury's bond buyback intervention fueled demand for the precious metal. Spot gold rose 0.7% to $4,635.39 an ounce, reaching its highest level since May 14, while US gold futures for December delivery settled 0.4% higher at $4,697.80 per ounce. This upward momentum was attributed to the Treasury's plan to increase buybacks of longer-dated government debt, which pushed the dollar to multi-month lows and stabilized bond yields.
The Treasury's actions, including Secretary Scott Bessent's statement about expanding buybacks beyond the initial $4 billion, revived concerns about dollar debasement and US debt sustainability. This prompted investors to seek alternatives like gold, a trend that contributed to a 65% rally in gold during 2025. A weaker dollar makes gold, which is priced in the currency, more attractive to foreign buyers. Analysts like Jim Wyckoff from American Gold Exchange noted that both fundamental and technical factors were aligning bullishly for gold, with TD Securities identifying $4,700 as the next potential target if momentum continues.
Investor confidence in gold was further bolstered by significant inflows into gold-backed Exchange Traded Funds (ETFs), which attracted 46.7 metric tons ($6.4 billion) last week—the largest weekly demand in 10 months, led by North American and European-listed funds. Billionaire investor Ray Dalio also advised reducing bond holdings and allocating up to 15% to gold as a hedge against a potential US debt crisis. The market is now awaiting the Personal Consumption Expenditures (PCE) price index data on Wednesday and Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole Symposium on Friday for further cues on inflation and interest rate outlooks, which could influence gold's trajectory.
