Gold Prices Surge as Weakening Dollar Boosts Demand

World gold prices continued to climb in the first trading session of the week, setting the stage for their fourth consecutive week of increase. The upward momentum was fueled by the weakening US dollar and concerns over the US fiscal burden.

As of 9:51 am Vietnam time, spot gold prices rose 0.18% to $4,631.53 per ounce, while December gold futures contracts increased 0.20% to $4,690.01 per ounce.

The surge in gold prices was triggered by the US Treasury Department's decision to boost long-term government bond repurchases, which dragged down bond yields and the dollar. This move also raised concerns about the size of US public debt and the fiscal health of the world's largest economy.

Market analysts believe that the weakening dollar is creating a favorable environment for gold, as investors turn to the precious metal to hedge against currency devaluation risks. Even Bridgewater Associates' founder Ray Dalio thinks it's wise to allocate up to 15% of one's portfolio to gold to mitigate the risk of a US debt crisis.

However, some market forces may hinder the strong increase in gold prices. Rising energy costs could lead to higher inflation expectations and put pressure on precious metals.