Gold Prices Surge Amid Weaker USD and Interest Rate Expectations
Gold prices surged last night, nearing the crucial milestone of $4,500 per ounce. The precious metal saw a significant breakthrough in its trading session on August 19 (US time), reversing previous cautious developments and reaching a high point of $4,498 per ounce.
The increase was substantial, with spot gold prices rising by more than 3.7% in just a short period. US gold futures also jumped sharply, surpassing the $4,545 per ounce mark.
One key factor driving this sudden surge in gold prices is the unexpected announcement from the US Treasury Department about doubling the scale of long-term bond repurchases to support liquidity. This move pushed down US Treasury bond yields and put pressure on the USD.
The weaker greenback made gold cheaper for buyers holding other currencies, thereby stimulating demand. Additionally, expectations that the US Federal Reserve (Fed) will not continue to raise interest rates in September also supported the precious metal.