Gold Nears Three-Month High After 7% Four-Day Rally on US Treasury Buyback Expansion
Summary
- Gold prices surged more than 7% over four trading sessions after the US Treasury announced an expansion of long-term Treasury buybacks, bringing the metal close to its highest level in three months.
- More than 28 tons flowed into gold-backed ETFs last week, while gold broke above its 200-day moving average, signaling stronger buying and bullish momentum.
- Uncertainty over US monetary policy, the upcoming Jackson Hole speech and geopolitical and trade tensions are boosting gold's appeal and demand as a safe-haven asset.
Forecast Trend Report by Period
Gold climbed for a fourth straight trading day after the US Treasury expanded its intervention in the long-term bond market, leaving bullion near its highest level in three months.
Spot gold rose 0.5% to $4,676.92 an ounce as of 7:45 a.m. in Singapore on August 24, according to Bloomberg. The metal has advanced more than 7% over the past four trading sessions since the Treasury announced a broader buyback program for long-dated Treasuries.
The surprise expansion in Treasury buybacks revived concerns about the US fiscal outlook and high borrowing costs. The move also pressured the dollar, increasing the appeal of gold for investors because the metal is priced in the US currency. Treasury Secretary Scott Bessent has said he is prepared to expand buybacks of high-interest Treasury bonds further.
Investor demand for gold is also strengthening. Gold-backed exchange-traded funds tracked by Bloomberg saw inflows of more than 28 tons last week, the largest since January. Bullion also moved above its 200-day moving average, a key technical indicator that points to bullish momentum. George Efstathopoulos, a portfolio manager at Fidelity Holdings, said he doubled the fund's gold holdings over the past three weeks because of uncertainty over US monetary policy.
Another variable this week is Kevin Warsh's speech at Jackson Hole. Warsh is set to speak at the annual Jackson Hole economic policy symposium on August 28 and is expected to signal how the Federal Reserve will respond to sticky inflation. Markets are watching for clues on the path of interest rates and long-term Treasury yields.
Geopolitical and trade tensions are also supporting demand for gold as a safe-haven asset. The US has warned it will impose economic sanctions on countries that do business with Iran as part of an effort to isolate Tehran. Trade tensions with Canada have also intensified after negotiations between the two countries broke down.
At the same time, silver rose 0.9% to $69.53 an ounce, while platinum and palladium also gained. The Bloomberg Dollar Spot Index edged lower.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.