Gold holds near three-month high as debasement trade returns

Gold prices soared near a three-month high on Wednesday, as the US Treasury's bold intervention in the bond market reignited concerns about a potentially weaker US dollar. This move prompted investors to seek alternatives to the greenback, driving up the value of bullion. The metal climbed as much as 0.5 percent to above $4,620 an ounce in early trading, marking its third weekly gain of the week.

The surge in gold prices comes after the Treasury announced a surprise increase in buybacks of long-dated government debt, which sent yields and the US dollar lower. The intervention aims to curb borrowing costs and has fueled speculation about a shift in US policy that could weaken confidence in the dollar, making other investments more appealing.

This so-called "debasement theme" had previously contributed to gold's 65 percent rally in 2025. Even after the surprise announcement on Wednesday, US Treasury Secretary Scott Bessent expressed readiness to expand buybacks of more expensive debt further. He also hinted at an upcoming fiscal initiative to tackle record-high borrowing costs.

Additionally, billionaire investor Ray Dalio, founder of Bridgewater Associates, advised investors to reduce their bond holdings and allocate up to 15 percent of their portfolios to gold as a hedge against potential US debt crisis. Gold prices ended the day at $4,608.01 an ounce in Singapore, marking a 1.9 percent increase for the day.

Silver and platinum prices remained relatively stable, while palladium prices dipped slightly. The Bloomberg Dollar Spot Index, which tracks the value of the US dollar, remained relatively unchanged after falling to its lowest level in over three months the previous day.