Gold Set for Third Weekly Gain on US Treasury Buyback Plans
Gold was on track for a third weekly gain after the US Treasury’s unexpected ramp-up in buybacks of long-dated government debt underscored concerns about its burden.
Gold is poised for a third weekly gain after the US Treasury's unexpected increase in buybacks of long-dated US government debt raised concerns about the nation's debt burden. The metal was trading near $4,560 an ounce and could end the week with a 4% increase. The Treasury's surprise liquidity injection on Wednesday caused yields and the US dollar to drop, while supporting bullion.
On Thursday, US Treasury Secretary Scott Bessent hinted that the administration may expand buybacks of costlier debt and soon announce a fiscal initiative to tackle the highest borrowing costs in years. Despite yields partially recovering, the move highlights worries about the growing US government debt, which has been a major driver of gold's earlier multi-year rally.
Analyst Charu Chanana from Saxo Markets noted that gold has maintained its value even as long-end Treasury yields remain high, suggesting the rally is more about dollar weakness and US fiscal or monetary credibility. To confirm the rally, gold must close above the 200-day moving average around $4,514 an ounce. The rally in August so far stands at 11%, but could be affected by rising energy prices and inflation risks.
Oil is expected to see a sharp gain following US President Donald Trump's threat to escalate the conflict with Iran, which dampens hopes for a quick deal to reopen the Strait of Hormuz.
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