Gold jumps as Treasury buybacks revive debasement concerns
Bullion’s rally of around 14% so far in August could be tempered by the rebound in energy prices
Gold prices surged to their highest level in three months on Friday (Aug 21), poised to end the week about 5% higher. The uptick followed the US Treasury's bold intervention to stem a damaging increase in borrowing costs, reigniting investor concerns about the fiscal burden. The Treasury's unexpected ramp-up in buybacks of long-dated government debt lowered yields and the US dollar, prompting analysts to warn that this could weaken faith in the greenback and push investors towards alternatives.
UBS Group chief strategist Bhanu Baweja said the move was a significant signal for gold, while the dollar would face the consequences. The metal's 14% rally this month could be tempered by the rebound in energy prices, which keep inflation risks and rate-hike bets on the table.
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