Gold holds near three-month high as debasement trade returns

Gold prices surged near a three-month high on Friday after the US Treasury's intervention in the bond market reignited worries about a weaker US dollar, prompting investors to seek alternatives. The metal climbed as much as 0.5% to above US$4,620 an ounce, marking a third consecutive weekly gain. This bullish run follows a 5% jump last week after the Treasury announced a surprise increase in the purchase of long-dated government debt, causing yields and the dollar to decline.

The Treasury's direct intervention aimed to control borrowing costs, fueling concerns that US policy could erode confidence in the dollar, thereby making other investments more appealing—a return to the "debasement" theme that propelled gold's 65% rally in 2025. Even after the surprise announcement on Wednesday, Treasury Secretary Scott Bessent indicated readiness to expand buybacks of costlier debt and hinted at an upcoming fiscal initiative to tackle record-high borrowing costs.

Notably, Ray Dalio, the billionaire founder of Bridgewater Associates, advised investors to reduce bond holdings and allocate up to 15% of their portfolios to gold to hedge against the risk of a US debt crisis. Gold prices closed the session at US$4,619.17 an ounce in Singapore, up 0.4% from the previous trading day, while silver also rose 0.4% to US$69.29 an ounce, with platinum and palladium remaining unchanged.

The Bloomberg Dollar Spot Index, which tracks the value of the dollar, held steady after falling to its lowest level in over three months in the prior session.