Gold Prices Surge Amid Rising Concerns Over US Fiscal Health
The gold market has regained momentum, with prices surging to their highest level in three months. The $XAU/USD (XAUUSD.CFD)$ pair rose from $4,100 per ounce in late July to nearly $4,700 by late August, a gain of around 13-15%. This buying activity is not limited to gold itself but has also spread to related assets such as the SPDR Gold ETF ($GLD.US$) and the VanEck Gold Miners Equity ETF ($GDX.US$).
According to JPMorgan, the $SPDR Gold ETF (GLD.US)$ saw inflows of approximately $5 billion over the past month, with a single-day buying record observed at around $1.35 billion. Morgan Stanley noted that while 93 tons flowed out of gold ETFs in May and June, 70 tons flowed back in during July and August.
The current rally is driven not only by physical prices but also by the return of investment capital. Unlike January's market dynamics, which were centered around expectations of a dovish Fed Chair leading to rate cuts, this time the focus has shifted to concerns over US fiscal health and the Treasury market.
A key factor supporting gold prices since mid-July is the growing concern over the sustainability of fiscal deficits and debt. The 30-day correlation between gold prices and long-term Treasury yields briefly turned positive, suggesting that market attention has shifted from interest rates to the reality of US fiscal conditions.