Gold Price Soars to Three-Month Highs Amid Dollar Decline

The US dollar's sharp decline is sending gold prices surging to three-month highs near $4,600 as investors flock to safe-haven assets. The precious metal has broken above the 200-day Simple Moving Average (SMA) and is showing bullish momentum.

Rabobank analysts observe that normally lower Treasury yields would weaken the currency through the interest-rate channel, but this episode appears different. 'This time, gold and crypto also rallied, suggesting concern about fiscal credibility and the perceived management of borrowing costs,' says Rabobank.

The experts wonder whether the end-result will be unchanged long-term yields, but a weaker dollar, underscoring a potential shift in how markets are pricing US risks. The Relative Strength Index (RSI) is reaching overbought levels in most timeframes, hinting at a stretched rally.