Gold Price Surges Amid US Dollar Debasement Concerns
The price of gold held firm in London on Thursday, poised to finish the week by erasing its previous $500 plunge from Summer 2026. The rise comes as US bond yields began climbing again, following a big buyback announcement from the Treasury Department that analysts see as another step towards Dollar debasement.
New York's stock market fell back on Thursday, reversing Wednesday's small rally in the S&P 500 index, as gold extended its previous $160 leap to trade $35 above $4500 per troy ounce. The price of gold also surged in China, jumping 2.8% for the day to ¥970 per gram at the Shanghai Gold Exchange, setting a new high since May 5.
The official wholesale price in gold's top consumer nation, China, is now at a discount to London quotes of nearly $9 per ounce, the steepest disincentive for new imports into China since early April. The move has been triggered by the US government's long-term borrowing costs hitting their highest level in two decades as federal debt tops $40 trillion.
Robin Brooks, a former FX economist and now Brookings Institution think-tank fellow, warns that 'Dollar debasement has begun [and] buyback announcement risks sending the Dollar into a devaluation spiral.' The US Dollar today hit its lowest FX value since mid-May on its trade-weighted DXY index, down 3.2% from mid-June's 13-month high.
Nicky Shiels, precious metals strategist at Swiss bullion refiners and finance group MKS Pamp, expects 'sharp relief rallies in debasement assets into the Sept FOMC meeting' of US central bank the Federal Reserve.