Gold Holds Above US$4,500; Weak Dollar and Treasury Buybacks Fuel Rally
Gold prices maintained positive momentum during Friday's trading, holding above the psychological level of US$4,500 per troy ounce. XAU/USD rose approximately 0.3% to US$4,530.95, while gold futures strengthened to around US$4,587.11. This week-long rally puts gold on track for its third consecutive weekly gain, with an increase of about 4% for the week and over 11% throughout August.
Gold's strength continues to be supported by a weakening US dollar. The Dollar Index (DXY) fell about 0.1% to 98.77, making gold more attractive to investors using other currencies. Additionally, a key catalyst was the US Treasury Department's move to increase its long-term bond buyback program to at least US$4 billion per operation; this policy pressured Treasury yields and boosted demand for safe-haven assets.
US Treasury Secretary Scott Bessent also signaled that the government could further expand these bond buybacks. He assessed that current yield levels do not fully reflect economic fundamentals, prompting the government to aim for bond market stability and lower long-term borrowing costs.
This gold rally also marks a strong recovery following a low of around US$3,942 in late June. Breaking through and sustaining a position above US$4,500 serves as a significant signal that buyers have regained market dominance after a prolonged period of consolidation.
Newsmaker Analysis: Gold's fundamentals remain bullish, driven primarily by a weak dollar, US fiscal concerns, and expectations of lower long-term yields. As long as prices hold above US$4,500, there remains a possibility of retesting the US$4,550–US$4,600 range. However, investors still need to be wary of the risk of a correction should Treasury yields rise again or the market begin to price in a more hawkish stance from the Fed regarding inflation.
Source: Newsmaker.id
