Gold Hits Three-Month High Amid Dollar Erosion Fears

Spot gold prices surged to a three-month high after the U.S. Treasury's move in the debt market reignited concerns over a softening dollar and nudged investors towards alternative assets.

The precious metal rose as much as 1% to surpass $4,649.92 an ounce, extending its winning streak to a third week. This rally comes on the heels of last week's surge, where bullion climbed more than 5% after the Treasury unveiled an unexpected expansion of buybacks targeting long-dated government bonds.

The direct effort to curb borrowing costs has fueled concerns that American policy could erode confidence in the dollar while making other investments more appealing, a revival of the so-called debasement trade. A weaker dollar typically provides a boost to commodities priced in the currency, which is why gold prices are seeing an uptick.

Treasury Secretary Scott Bessent has signaled a willingness to go further, pledging to broaden buybacks of higher-cost debt and hinting at a fiscal package aimed at tackling borrowing expenses. This move has added to gold's allure, particularly as billionaire investor Ray Dalio advised investors to trim their bond exposure and allocate up to 15% of their portfolios to bullion as a safeguard against a potential U.S. debt crisis.