Gold Prices Rally to 11-Week High on Falling Yields and Weaker Dollar
Gold prices reached an 11-week high on Wednesday, driven by falling long-term US Treasury yields and a weaker dollar. The precious metal surged as much as 3.7% to $4,495 an ounce in midday trading in New York, its highest level since late May.
The most-traded gold futures also jumped around 3% to over $4,550 an ounce. This latest rally takes gold's year-to-date gain to around 4%, marking a significant recovery from the sell-off that saw the metal fall more than 20% between March and July.
The move was largely attributed to the US Treasury Department's announcement to increase its buybacks of government securities with maturities ranging from 10 to 30 years. This decision pushed long-term yields lower, weighing on gold, but ultimately gave precious metals a 'jolt of life', according to TD Securities analysts.
Additionally, fading expectations of a Federal Reserve interest rate hike next month have also contributed to the rally. Markets are now pricing in around a 65% chance that the Fed will leave rates unchanged at its September meeting, according to the CME FedWatch Tool.