Gold Prices Soar Past $4,600 Amid Renewed Investment Demand

Ewa Manthey, Commodities Strategist at ING, believes gold's price rally will be influenced by sustained investment demand and the Federal Reserve's response to inflation. Gold prices have surged past $4,600 per ounce due to renewed interest from investors and concerns about the U.S. fiscal outlook.

The latest move was sparked by the US Treasury's decision to increase its purchases of longer-dated government debt, with the maximum size of buyback operations in the 10-to-30-year segment rising from $2 billion to at least $4 billion. This has refocused attention on government borrowing and fiscal credibility.

Manthey notes that gold's resilience suggests the rally is not solely a response to lower yields. Instead, it is driven by concerns about currency debasement, which reinforces gold's appeal as a store of value.

The improvement in ETF demand has been another positive signal, with global gold-backed ETFs attracting $3 billion in July and adding 23 tonnes to their holdings. Central bank demand has also remained strong, with reported net purchases reaching 51 tonnes in June.