Gold was set to rise for a third consecutive week today, scaling an over three-month high and breaching its 200-day moving average, driven by a feeble dollar and the US Treasury’s surprise mid-week liquidity support announcement.
Spot gold climbed 1.5% at $4,587.23 per ounce today, having hit $4,601.29 – its highest since May 15 – earlier in the session. US gold futures rose 1.6% to $4,645.00.
Bullion has gained 5% so far this week after its biggest one-day rise since early February on Wednesday, but ended lower yesterday as bond yields rose following a sell-off.
“Gold surged again after a setback on Thursday as long-end Treasury yields climbed following a Bessent interview that failed to quell investor concerns about spiralling US debt and fiscal sustainability,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Ole added that investor concerns about the level of US debt and the softer dollar were the overriding drivers for the market, combined with fresh technical momentum buying above gold’s key 200-day moving average level.
The metal is now trading above all its key moving averages, with the 200-day moving average currently around $4,513.23. Speculators who trade on technical signals regard a break above key moving averages as a bullish signal.
US Treasury Secretary Scott Bessent signaled he could ramp up government buybacks of Treasuries even further, after the department announced on Wednesday it would double the size of its buybacks on longer-dated securities.
Two Federal Reserve officials expressed caution when asked how the Treasury Department’s debt management changes could affect the Fed’s monetary policy stance.
“Bullion bulls may have to wait for the latest Fed policy signals out of Jackson Hole in the week ahead, before attempting to reclaim the $5k handle,” said Han Tan, chief market analyst at Bybit.
Gold, a non-yielding asset, loses appeal when rates rise.
The recent rally in prices deterred retail buyers in India, while demand in top consumer China held steady.
Elsewhere, spot silver gained 2% to $69.48 per ounce, platinumclimbed 2.5% to $1,873.58, while palladium rose 1.2% to $1,349.58.
