Gold Prices Ease After Briefly Touching Two-Month High
Gold prices declined on Thursday (20/8) after briefly reaching their highest level in over two months. The precious metal had surged more than 4% in the previous session, prompting investors to take profits.
The price of spot gold fell by 0.6% to USD 4,525.79 per troy ounce, its highest level since June 2nd. Meanwhile, US gold futures rose by 0.2% to USD 4,553.30 per troy ounce.
The sharp rise in gold prices on Wednesday (19/8) was triggered by the US Treasury's announcement to double the size of its buyback operations for long-term government debt. This policy aimed to improve liquidity in the bond market, which had experienced a major sell-off due to rising inflation risks caused by the US-Israel war against Iran.
The US dollar hovered near a three-month low, further contributing to gold's surge. According to Ilya Spivak, head of global macro at Tastylive, 'the USD 4,500 range has been decisively breached. If prices hold above that range, the upward momentum is likely to continue.'
Total US government debt surpassed USD 40 trillion for the first time, renewing warnings over the risk of a fiscal crisis. Edward Meir, a Marex analyst, noted 'rising concerns over financial market stability, high levels of borrowing and debt, as well as the government's inability to cut spending, are very positive factors for gold.'
Concerns over inflation have increased at the Federal Reserve's meeting last month, with several Fed officials prepared to raise interest rates. The probability of the Fed keeping interest rates unchanged in September stands at 67%, while a rate hike is estimated at 33%.