Gold is trading close to a three-month high, following the US Treasury's significant intervention in the bond market. This action has raised concerns about a weaker US dollar, prompting investors to seek alternative assets like gold. Bullion climbed as much as 0.5% to above $4,620 an ounce, marking its third consecutive weekly gain. This surge in gold prices comes after the Treasury announced a surprise increase in buybacks of long-dated government debt, which led to lower yields and a depreciating dollar. The metal experienced a more than 5% rise last week.
The Treasury's efforts to control borrowing costs through direct market intervention have fueled fears that US policy could erode confidence in the dollar, making other investments more attractive. This scenario mirrors the "debasement theme" that contributed to gold's substantial 65% rally in 2025. A weaker dollar is generally beneficial for commodities, as they are priced in the currency. Treasury Secretary Scott Bessent has indicated he is prepared to expand buybacks of costlier debt further and plans to unveil a fiscal initiative soon to address high borrowing costs.
Further boosting confidence in gold, billionaire investor Ray Dalio of Bridgewater Associates recommended that investors reduce their bond holdings and allocate up to 15% of their portfolios to bullion as a hedge against a potential US debt crisis. Gold increased by 0.4% to $4,619.17 an ounce in Singapore, adding 1.9% on Friday. Silver also rose by 0.4% to $69.29 an ounce, while platinum and palladium saw little change. The Bloomberg Dollar Spot Index remained flat after reaching its lowest point in over three months during the previous session.
