The debasement trade is back, but gold still faces risks
(Kitco News) – After a months-long correction that saw gold prices drop 30% from their all-time highs, the market is once again attracting significant momentum. Gold prices are starting the week with a push toward $4,700 an ounce, currently trading at their highest level in 15 weeks.Analysts have described the renewed bullish momentum as a resurgence of the debasement trade after the U.S. Treasury announced it would buy long-dated bonds in an attempt to reduce borrowing costs.Bart Melek, Head of Commodity Strategy at TD Securities, said in a note Friday that gold and silver are surging as investors worry about America’s fiscal situation after the nation’s debt surpassed $40 trillion last week.“Based on Treasury Department statements, market participants believe the government bond market interference may get even more aggressive. At this stage, gold may continue to respond to the weaker USD,” Melek said.So far, Treasury Secretary Scott Bessent’s planned buyback has had little impact on the long end of the yield curve, with 30-year yields trading at 5.23% and 10-year yields around 4.70%.According to some reports, the Treasury Department can tap into nearly $1 trillion in its General Account to help fund its plans to purchase government bonds.Although TD Securities is bullish on gold in this environment, Melek said the precious metal still faces some potential headwinds as rising energy prices continue to drive inflation fears higher. He added that the bar for a rate hike remains low.“With crack spreads surging along with oil, there is still the possibility that the Fed will hike rates, as inflation expectations rise due to the continued oil shock,” he said. “A move to our $5,350/oz target is a little premature for now.”In another note published Friday, Nicky Shiels, Head of Research and Metals Strategy at MKS PAMP, said that if last year is any indication, the debasement trade has significant potential for gold. She said this sentiment is becoming a structural theme and could drive retail investors into a full-blown FOMO bubble.While gold has momentum to move higher, Shiels added that prices may have overshot tactically. She also noted that the bar for a rate hike remains low.However, Shiels said that despite the risks of higher interest rates, gold could perform well as it remains the cleanest “debasement” hedge and the cleanest “US political intervention” hedge.“One institution has a tightening bias, the other a loosening bias, aimed at the same curve,” she said. “While the bar for a Fed rate hike is low, Brent crude near $94, tight diesel/product markets, and rising crack spreads are an independent inflation-expectations driver — even if Treasury succeeds in capping nominal yields, real yields/breakevens/inflation expectations can keep rising from the energy side, which is a new inflation-driven Gold tailwind outside of the debasement narrative.”Commodity analysts at JPMorgan referred to gold’s rally last year as the “debasement trade.” Broad, global diversification away from the U.S. dollar in the second half of 2025 helped to drive gold prices to a record high of $5,600 in January. (Kitco Global Index shows how much of today’s gold move is the dollar versus the gold market itself.)See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
Monetary historian says US Treasury fragility points to sudden dollar shift
.embed-container { position: relative; padding-bottom: 56.25%; height: 0; overflow: hidden; max-width: 100%; } .embed-container iframe, .embed-container object, .embed-container embed { position: absolute; top: 0; left: 0; width: 100%; height: 100%; }(Kitco News) – Barry Eichengreen tells Kitco News he has changed his mind about how fast the dollar could break, explains where its losses have actually gone, and makes a case for trimming bonds anyway.Gold closed the week above $4,600 an ounce, with the dollar at its weakest since May and the US Treasury moving to hold down its own borrowing costs.Central banks have been buying more than a thousand tonnes of gold a year for several years now. That is close to a quarter of everything mined on earth.Barry Eichengreen doesn’t think most of that is a vote against the dollar.”I for one do not think that gold will come back as an integral function of the international monetary and financial system,” the Berkeley economist, who wrote the standard history of how money moves between countries, told Kitco News.He has changed his mind about something else, though. And he can tell you the day it happened.”I’ve become much more worried about an abrupt change where confidence in the dollar is lost before there has been time for these alternatives to step up,” he said. “And I’ve been worried about that since, to put a date on it, April 2nd, 2025, Liberation Day.”That matters because Eichengreen has spent most of his career as the calm one in this argument. While others called the dollar finished, he kept pointing at the same slow number. Its share of world reserves has been slipping about half a percentage point a year, from a little over 70% at the turn of the century to a little under 60% now.Where the money actually wentThe IMF doesn’t break out the currencies that have picked up the slack, so Eichengreen and his co-authors went and dug it out themselves, from the annual reports of roughly 80 central banks.”Of the ground the dollar has lost in the 21st century as a reserve currency, the euro has gained zero of that ground,” he said. “The renminbi, about a quarter, and the other three quarters have been gained by these non-traditional reserve currencies.”He means the Australian, Canadian, Singapore and New Zealand dollars. The Nordics. The South Korean won.”They are the currencies of small, open, well-managed, generally inflation-targeting countries.”The euro has gone nowhere for a simple reason. There is almost nothing to buy. Eichengreen counts three euro area governments carrying triple A ratings from all the major agencies, with maybe $4 trillion of bonds between them, against $40 trillion of US debt.”German banks hold German government bonds, Dutch insurance companies hold Dutch government bonds. These markets are siloed.”So why the goldEichengreen traces the buying back to the financial crisis rather than to any quarrel with Washington. Emerging market central banks mostly didn’t inherit gold, he points out, and had very little of it to start with.”I think it was very much structural catch-up until recently.”Recently is doing some work in that sentence.”I don’t know quite how to interpret the most recent wave of gold buying. I think there now may be a combination of continued structural catch-up and growing worries about the greenback… We hear stories of unusual US Treasury interventions in that market.”And bringing the metal home isn’t always about sanctions either. France, Germany and the Netherlands all repatriated gold under pressure that was political rather than financial.”Marine Le Pen famously wrote a letter to the governor of the Bank of France, like 10 years ago, saying, in effect, what in the world are you doing vaulting our gold in London and New York? It should be here in Paris.”It costs them something, though.”What they give up, of course, is the ability to use that gold as collateral in financial transactions, to lend it and earn interest on the loan, which they can do if it’s vaulted in London or New York.” Which is why the countries doing it tend to be the ones sitting on more reserves than they expect to need. “Central banks are going into that, contemplating that bargain with their eyes open.”Two Russian jets from Caracas to TehranI asked him to make the hardest version of his case rather than a soft one. He did.Money has to do three jobs. It has to price things, pay for things, and hold its value. Gold manages one of them.”Would you want your salary at the end of the month to be denominated in ounces of gold, which may turn out to be worth 10% less than you thought it would be at the grocery store?”Then he told the story he uses to finish the argument. It’s in his new book. Venezuela, under sanctions, needed to pay Iran, also under sanctions, for oilfield equipment and repair work.They paid in gold bars. Then they hired a couple of Russian jets to fly the metal from Caracas to Tehran.”That kind of epitomizes the difficulty of making normal payments using gold.”Then he turnedRay Dalio said on Friday that investors should hold 10% to 15% of a portfolio in gold, ahead of a US debt crisis he thinks arrives inside three years. Ole Hansen of Saxo Bank told Kitco News earlier in the week that hard assets belong at 5% to 10%.Eichengreen’s first answer was dry. “People like Ray Dalio have been predicting a fiscal and financial crisis for some time now. And they’ll keep predicting it until they’re right.”His second answer was not.”It is true that the US now appears to be on an unsustainable fiscal trajectory, where the debt-to-GDP ratio is continuing to spiral upward, where investors in US Treasuries are more worried now than they have been in the past.”And then the part that lands on anyone with a retirement account.”Treasuries have been viewed as the safe bedrock of 60/40 portfolios. If they are now less safe and more highly correlated with equities, that is an argument for trimming one’s bond portfolio and looking not to equities but to other assets, where gold is an example of what falls under that other asset category.”He wouldn’t put a number on it. “Giving you a number like 5% or 10% of your portfolio is above my pay grade… If it was, I wouldn’t be a professor, I’d be a hedge fund manager, and I’m not.”He also thinks gold already sits inside the system rather than outside it. “It is the respectable commodity play for central bank reserve managers. All widely diversified global investors ought to have a commodity play in their portfolios.””If we saw central banks beginning to invest in rare earths or Bitcoin or who knows what, people would sit up and wonder what had gotten into them.”Does he own any himself?”I own a little bit of gold that my wife and I inherited from my late mother, who passed away a couple of years ago. So it’s in the form of jewelry that we treasure. But to give you the complete answer, no, we have not gone out and actively purchased gold.”What this week actually signalledThe sharpest thing Eichengreen said had nothing to do with the metal.Washington helped prop up the yen last month, and it paid using euros rather than dollars. It also pushed the Federal Reserve to widen a facility so the Bank of Japan could pledge its Treasuries for cash instead of selling them. Days ago, the Treasury doubled its own buybacks of long-dated debt.He doesn’t think any of it worked the way it was meant to.”I don’t think that trick, or the more recent trick of the Treasury upping its purchases of longer-term bonds, fools the market. Both operations are signals that there is concern inside the Treasury Department, maybe inside the White House as well, about the fragility of the US Treasury market.”Then he made a connection nobody else has.”If there is a reluctance on the part of the US government to see foreign authorities actually use their dollars, that’s a signal that their dollars are not as liquid as had been thought previously, and investors, official and private, are going to take note.”I asked what history says happens when a treasury runs out of room and the central bank ends up buying the debt instead. He didn’t hedge.”Nothing good came next. In other words, financial repression, force-feeding government bonds to banks and other financial institutions, forcing the central bank to keep interest rates artificially low. Those kinds of operations clearly do not reassure international investors in a currency.”The bet America may be losingEichengreen also suspects the United States has backed the wrong technology.The GENIUS Act, signed into law in July 2025, is the first federal statute covering payment stablecoins. Issuers have to back every token one for one with cash, deposits and short-dated Treasury bills, publish their reserves monthly and open the books to an independent accounting firm. In other words, Washington has handed the dollar’s digital future to private companies and told them to hold Treasuries.Europe and China are going the other way, building digital versions of central bank money.”My own view is that the arrow of history points away from competitive currencies, from private monies, toward the public authorities providing the public good of stable money,” Eichengreen said. “Meaning that the Europeans and the Chinese who are betting on central bank digital currencies may have it right in the long run. And the United States, which since the Genius Act has been betting on private label stablecoins, maybe we have it wrong.””And if we have it wrong and stablecoins don’t enjoy a lot of take-up, that will be bad for the continued role of the dollar in the global system.”There’s a question underneath all this that regulators haven’t answered. In March 2023, Circle disclosed that $3.3 billion of the cash reserves behind its USDC stablecoin were trapped at the failed Silicon Valley Bank, about 8% of the total. The token fell as low as 87 cents before US regulators stepped in and guaranteed the deposits. Next time, the reserves might be sitting in Treasuries instead.”Will the Fed then feel compelled to act as lender of last resort to a non-member stablecoin issuer, and how would that work?… We’re in the early, early days. We don’t know.””I was wrong”I asked what would have to happen for him to decide he had this wrong. He answered by describing a time he already did.”I wrote an earlier book in 2011, Exorbitant Privilege, where I said the dollar will give way to the euro and the Chinese renminbi. I was wrong. I thought that would happen more quickly than it did. I was wrong because I didn’t realize the movement was not toward the euro and the renminbi, but toward these other non-traditional reserve currencies.”Then he reached for Keynes.”What do you do when you’re contradicted by the evidence? He said, I change my mind. What do you do, young man?”Kevin Warsh gives his first Jackson Hole keynote as Fed chairman on Friday. The symposium’s theme this year is financial innovation and payments rather than interest rates, which puts Eichengreen’s subject directly in front of the Fed.Barry Eichengreen is a professor at the University of California, Berkeley. His new book is Money Beyond Borders, published by Princeton University Press.Watch the full interview with Barry Eichengreen on Kitco News, including why he says a crisis of confidence in the dollar would put globalization itself at risk, why China’s Shanghai gold hub is not there yet, and what the 1930s and the 1970s got wrong about the dollar’s death.See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
Gold, silver extend rally as dollar slide offsets higher yields
(Kitco NewsWire) – Spot gold and silver prices are higher in late-afternoon U.S. trading Friday, as a weaker U.S. dollar, fiscal-risk hedging and continued Strait of Hormuz uncertainty kept buyers in precious metals despite another session of elevated Treasury yields. At the time of writing, spot gold was trading near $4,602.99 an ounce, up 1.86%, while spot silver was trading at $68.970, up 1.29% on the session.North American equity markets closed higher, trimming losses from a volatile week. The S&P 500 rose 33.21 points, or 0.4%, to 7,674.37, the Dow Jones Industrial Average gained 517.80 points, or 1.0%, to 53,277.01, the Nasdaq Composite added 113.29 points, or 0.4%, to 26,180.45, and the Russell 2000 rose 25.44 points, or 0.9%, to 3,017.87. European markets also finished higher, with the pan-European STOXX 600 up 0.59% to 654.18, supported by a 2.5% gain in basic resources as the softer dollar lifted gold and mining shares.The latest positioning remains defined by the gap between stronger near-term activity data and a weaker dollar, lower Fed-hike conviction and fiscal anxiety. The U.S. flash composite PMI rose to 56.0 in August, its strongest reading in more than 4 years, led by a services reading of 56.8, while manufacturing slipped to a five-month low at 53.2. Treasury yields stayed elevated, with the 10-year yield near the 4.7% area and the 30-year yield near the 5.3% area, as investors looked through the Treasury’s long-dated buyback plan and kept pressure on the long end. Fed minutes this week showed several officials were still prepared to raise rates if inflation does not cool, but market pricing continues to lean toward a September hold. Gold has held the breakout because the dollar has fallen below 99.00, fiscal concerns remain front and center and next week’s July PCE inflation report and Fed Chair Kevin Warsh’s Jackson Hole remarks now carry the next major policy signal.Precious metals remain the standout cross-asset move. Gold traded as high as $4,632.90, cleared the $4,595 technical objective and held above its 200-day moving average region, while silver reached $70.14 before easing back toward $69. Silver has now broken through $66.55, $68.02 and $69.48 during the week, putting the next focus on the $71.00 to $72.08 area. The move has both macro and physical support: the Treasury buyback announcement started the rates-and-dollar reversal, while silver’s industrial-demand and deficit narrative has helped it outperform gold into the close.The Strait of Hormuz remains the main geopolitical channel into oil, inflation expectations and defensive demand. U.S.-Iran peace talks remain stalled, the U.S. is preparing tougher sanctions against Tehran and commercial traffic through the strait remains well below prewar levels. Oil stayed elevated into the close, with Brent near $93.29 a barrel and WTI near $84.34, leaving the Fed trade conflicted. For gold, the setup remains supportive but not clean: restricted Gulf shipping and a weaker dollar support defensive demand, while high crude keeps inflation risk alive and prevents a clean decline in Treasury yields.The key outside markets see Nymex WTI crude oil prices lower and trading around $84.34 a barrel, while Brent crude was near $93.29. The yield on the benchmark 10-year U.S. Treasury note is trading near the 4.7% area. The U.S. dollar index is softer. (Kitco Global Index shows how much of today’s gold move is the dollar versus the gold market itself.)Technically, spot gold bulls’ next upside price objective is to push prices back above the $4,653.25 resistance level, with a sustained move targeting $4,852.91. Bears’ next near-term downside price objective is a break below $4,453.59, with deeper downside targets at $4,382.83 and then $4,253.93. First resistance is seen at $4,653.25 and then at $4,852.91. First support is seen at $4,453.59 and then at $4,382.83.Spot silver bulls’ next upside price objective is to drive prices back above $70.14, with a move above that level targeting $71.56 and then $72.08. The next downside price objective for the bears is a break below $66.29, with deeper downside targets at $64.20 and then $62.75. First resistance is seen at $70.14 and then at $71.56. Next support is seen at $66.29 and then at $64.20.See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
Wall Street bereft of bears after gold smashes $4,600/oz, Main Street bolsters bullish majority with Warsh, PCE in focus
(Kitco News) – Gold prices surged to their third straight weekly gain, as concerns over U.S. debt sustainability, a weaker dollar, and the Treasury Department’s surprise move to expand long-dated bond buybacks helped the precious metal break above $4,600 per ounce.Spot gold kicked off the week trading at $4,381.12 per ounce on Sunday evening, and pushed higher Monday as traders continued to buy the previous week’s rebound. The move stalled Tuesday as long-dated Treasury yields climbed and the U.S. dollar held firm, with spot prices ultimately setting their weekly low at $4,324.49 per ounce early Wednesday morning.Gold’s breakout came just a few hours later when the U.S. Treasury announced that it would double the size of buybacks for 10- to 30-year debt securities to at least $4 billion per operation, a move that briefly drove long-end yields lower and intensified concerns about the sustainability of U.S. borrowing as total public debt neared $40 trillion. The dollar weakened after the announcement, and gold surged above $4,500 as investors moved into hard assets.The rally extended Wednesday afternoon when the July FOMC minutes showed policymakers still focused on inflation but unlikely to deliver further rate hikes in the near term. Gold held above $4,500 on Thursday, then accelerated again through Friday’s trading session as fiscal worries, dollar weakness, and renewed precious-metals demand outweighed stronger U.S. services PMI data and rising yields. Spot gold ultimately set its weekly high at $4,632.14 per ounce on Friday afternoon and held above $4,600 per ounce at the weekly close.The latest Kitco News Weekly Gold Survey showed Wall Street bereft of bears after gold’s late-week surge, while Main Street sentiment shot higher into bullish territory. “Gold rose for the third consecutive week,” said Marc Chandler, managing director at Bannockburn Global Forex. “It poked above $4600 at the end of the week. Gold overcome the 200-day moving average for the first time in two months and surpassed the 38.2% retracement of its losses from the record high in March. A convincing move above $4600 targets the $4680 area.”“The fundamental driver appeared to be what is perceived by many as another attempt by the US Treasury to suppress the rise in long-term yields without reducing issuance,” Chandler noted. “Still, momentum indicators are stretched, and participants should be on watch for some kind of technical signal of a reversal or consolidation.”“Up,” said Darin Newsom, senior market analyst at Barchart.com. “Why? Well, I tried to buck the trend last week and that didn’t turn out so well. The bottom line is, as my Rule #6 reminds us, fundamentals win in the end, and as long as central banks around the world continue to buy, gold is fundamentally bullish.”“The other bottom line is this past week showed why the rest of the world continues to sell the United States,” Newsom said. “Given this isn’t going to change any time soon, gold (and silver) should stay fundamentally bullish for the foreseeable future.”“Higher,” said Adam Button, head of currency strategy at investingLive. “The U.S. ‘strong dollar’ policy is dead and Bessent is flailing.”“Up,” said Adrian Day, president of Adrian Day Asset Management. “The short-term effect of US Treasury Secretary Bessent’s decision to increase buybacks of long bonds will fade, but the fundamental problems this Operation Twist exposes will not.”“Bessent has decided to attempt to save the bond market at the expense of the dollar,” Day said, “and this is positive for gold.”“Up,” said Rich Checkan, president and COO of Asset Strategies International. “Forget about a war or peace premium. Forget about interest rates for now. Treasury Secretary Scott Bessent vowed to at least double the buybacks of long-dated U.S. Treasuries. In other words, he plans to at least double the current pace of buying debt with new debt.”“This is incredibly inflationary as he is planning to expand the money supply faster than he currently is,” Checkan said. “More U.S. dollars chasing a finite amount of gold means only one thing… higher prices.”Kevin Grady, president of Phoenix Futures and Options, told Kitco News the Treasury Department’s intervention in the bond market pushed all other drivers to the side this week.“It’s all about the bonds right now,” he said. “That’s the whole story. Obviously, people are interested in crude oil, this and that, but this week, these moves in gold, it’s all about the bonds.Grady said the signal Bessent sent with the intervention is more significant than the purchases themselves.“They’re going to double purchases, but when people say, ‘Oh, we’re going to raise again, we’re going to raise again, we’re going to raise again,’ that just shows me there’s a systemic problem,” he said. “When you have to come in and intervene like that, I think it’s a problem, and I think the market is going to have to eventually deal with this.”But while the increased bond buybacks are unlikely to have a sustained impact on yields, the tide appears to be turning for precious metals.“I wasn’t bullish during the summer,” he said “I didn’t see any increase in open interest and things like that. But we’re starting to see some increase in open interest, they’re adding on, new longs coming into the market.”Grady said there are reasons why the back end of the board is so high in the first place. “Obviously, we just hit $40 trillion in deficit, which is a massive thing, and people aren’t talking about it.”The other major factor driving yields higher is the AI capex. “When you have Google paying a 30-year bond or a 60-year bond or whatever, they’re paying far out on the curve, and they’re paying you 6.4% on a 30-year bond,” he said. “Google doesn’t have the creditworthiness of the United States government, but some people are like, ‘You know what? I think it’s pretty close.’” “At this point, you’re going to have a really hard time pulling [yields] back.” But despite gold’s standout performance this week, Grady said he’s still waiting for confirmation from energy prices, inflation data, and the Fed before he believes in gold above $4,600.“We need to see some more data, and we’ll see what the Fed does,” he said. “I think September’s going to be interesting, and we’ll see what happens with rates. And if gas is $4.10 a gallon, I think that’s going to sneak into the inflation. It has to [impact] the inflation story, there’s no other way to do it.”“I think we have to just wait to see what happens with this bond story, and with the interest rates, and we’ll see if the market can sustain it.”This week, 11 analysts participated in the Kitco News Gold Survey, with Wall Street sentiment leaning overwhelmingly bullish after gold’s decisive move through key resistance levels. Eight experts, or 73%, expected to see gold prices gain ground during the week ahead, while the remaining three analysts, 27% of the total, saw the yellow metal consolidating its gains next week. None predicted a price decline. Meanwhile, 211 votes were cast in Kitco’s online poll, with Main Street investors adding to their bullish majority after gold’s standout performance. 164 retail traders, or 78%, looked for gold prices to rise next week, while 25 others, or 12%, predicted the yellow metal would lose ground. The remaining 22 investors, representing 10% of the total, expected to see sideways trading during the week ahead.Next week’s economic news calendar features fresh readings on consumer confidence, housing, inflation and economic growth, with new Fed Chair Warsh’s first Jackson Hole speech on Friday the clear highlight.The week’s data kicks off Tuesday morning with the Conference Board’s Consumer Confidence Index, along with New Home Sales for July. Wednesday then brings the week’s heaviest concentration of economic data, with the Core PCE Price Index, the second estimate of Q2 GDP, and Durable Goods Orders all scheduled for release at 8:30 am ET. Then on Thursday morning, traders will watch for the weekly jobless claims report.The week’s main event will be Fed Chair Kevin Warsh’s Friday morning speech at Jackson Hole, with markets looking for clues as to the timing of the Fed’s next move. Friday morning with also see the release of preliminary annual benchmark revisions to nonfarm payrolls, along with the University of Michigan’s final Consumer Sentiment reading for August.Lukman Otunuga, manager of market analysis at FXTM, said gold is flexing its muscles heading into the weekend after the Treasury’s surprise move to ramp up buybacks of long-dated government debt.“The precious metal has jumped over 5% since Monday and is on track for its third consecutive weekly gain,” he wrote. “With yields and the dollar sliding on the Treasury move which landed Wednesday, the path of least resistance points north.”While yields have retraced much of their initial decline, Otunuga said the underlying signal remains, as concerns about the scale of U.S. debt and currency debasement support gold.“A weaker dollar remains gold’s clearest tailwind, and this week’s explosive price action reflects that directly,” he said.Looking ahead, Otunuga believes July PCE data and Fed Chair Warsh’s Jackson Hole speech could prove pivotal. “The PCE report will shape near-term rate expectations, while Warsh’s address, alongside the BLS’s annual payroll benchmark, may set the tone for gold in September,” he said.Turning to the technicals, Otunuga pointed out that gold remains firmly bullish above the 200-day SMA. “A solid breakout and daily close above $4,600 could see prices test $4,700,” he said. “Weakness below $4,500 may expose $4,390 – a level near the 100-day SMA.”Naeem Aslam, chief investment officer at Zaye Capital Markets, said the gold market is being supported by several overlapping forces rather than one single catalyst.“Geopolitical tension is increasing demand for portfolio protection, softer inflation components are keeping future rate cuts in discussion, weak housing activity shows that restrictive financial conditions are still working, and stable business inflation expectations reduce the risk of a fresh broad inflation shock outside energy,” he wrote. “For gold, the most important variables now are real yields, the U.S. dollar, oil prices, and whether today’s European data strengthen or weaken expectations for monetary easing.”“If geopolitical stress remains elevated while bond yields soften and the dollar fails to strengthen materially, gold’s position above US $4,500 can remain supported,” Aslam said. “If stronger economic data push real yields meaningfully higher, however, the metal could face consolidation even with safe-haven demand still present.”Carsten Fritsch, commodity analyst at Commerzbank, wrote that the Treasury’s sudden buyback announcement followed a sharp rise in bond yields in the preceding days. “The main beneficiary of this is gold, as evidenced by strong inflows into gold ETFs,” he said. “Holdings in the gold ETFs tracked by Bloomberg recorded their strongest daily increase since September 2025 yesterday, at 18 tons. On the gold market, the US Treasury’s announcement was seen as a sign of stress. The sharp rise in US bond yields in the preceding days was not, in fact, due to a change in Fed interest rate expectations, but rather to long-term inflation risks and growing concerns about debt levels.”Fritsch noted that interest payments are expected to cost the U.S. government $1.1 trillion this fiscal year – representing a threefold increase from five years ago. “Given this trend, it is clear why US President Trump is calling on the Fed to cut interest rates and why an interest rate hike would probably be met with fierce criticism from the White House,” he said. “It is therefore hardly surprising that the minutes of the Fed’s latest meeting were largely ignored by the market, even though they struck a rather hawkish tone.”Alex Kuptsikevich, senior market analyst at FxPro, expects gold prices to rise once again next week, but he also warned of a potential pullback.“It seems that gold provided an example of a situation where technical analysis was the first to signal a move, with fundamental factors following later,” he said. “The reversal of the downtrend in early August prompted a reassessment of the outlook. The weakening of the dollar and the US Treasury’s announcement last week supported the rise in prices. Having gained nearly 5% over the week, gold has settled above the 200-day moving average and above the psychologically significant level of $4,500.”Kuptsikevich pointed to Bessent’s promise to increase bond purchases as the fundamental driver for gold’s appreciation. “As these are market interventions rather than solutions to the root cause of the crisis, money has flowed out of bonds and into inflation hedges: gold and cryptocurrencies,” he said. “The strength of this movement is an important signal that we are witnessing the start of a new cycle in the markets, rather than mere market noise. That said, in the coming weeks, it is still reasonable to expect less pronounced performance from gold, with potential for growth to $4,800 and even a corrective pullback lasting a couple of days.”Michael Moor, founder of Moor Analytics, expects to see gold prices rise further next week.“In a Higher time frame: I cautioned on 8/16/18 the break above $1,183.0 warned of renewed strength,” he said. “We have seen $4,443.1. These are OFF HOLD. We held exhaustion with a 56268 high and rolled over $1,651.1. This is ON HOLD. On a medium timeframe basis: The trade below 52554 projected this down $740 (+)—we attained $1,300.0. The trade below 52036 brought in $1,248.2 of pressure. The trade below 51606 brought in $1,205.2 of pressure. These are ON HOLD. We held exhaustion with a 49177 high after a pullback and rolled over $962.3. The break below 48185 projected this down $185 (+)—we attained $863.1. The trade below 47923 projected this down $205 (+)–we attained $836.9. The break below 47420 brought in $786.6 of pressure. These are ON HOLD. We held macro exhaustion with a 39554 low and bounced $687.5—if we continue in a bona fide bullish correction, the minimum target is 49636. This is OFF HOLD.”“On a lower timeframe basis: We held exhaustion with a 40190 low and bounced $623.9,” Moor wrote. “The trade above 41192 brought in $523.7. On 8/4 we left a bullish reversal—we have rallied $520.5 from the 41224 open. The break above 41389 projects this upward 345.00 (+)—we attained $504. On 8/5 we left a major bullish reversal—we have rallied $337.7 from the 43052 close. The break above 44170 (-3.6 tics per/hour) has brought in $225.9 of strength. The break above 44311 (+13 tics per/hour) has brought in $211.8 of strength. The trade above 44853 (-2 tics per/hour) has brought in $157.6 of strength. The fact we took out the 46240-71 area is a sign of continued strength.”At the time of writing, spot gold last traded at $4,602.99 per ounce for a gain of 5.27% on the week and 1.86% on the day.See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
