Gold Rallies to Three-Month High as Dollar Weakens
Gold prices surged to a three-month high on Friday, driven by a weak US dollar and technical momentum. The precious metal climbed 1.5% to $4,587.23 per ounce, with futures rising 1.6% to $4,645.00.
The rally comes after the US Treasury's surprise announcement to double its buybacks of long-dated securities on Wednesday. This move has sparked concerns about spiraling US debt and fiscal sustainability, causing bond yields to rise and weighing on gold in the previous session.
However, investors seem to be focusing on the underlying fundamentals rather than short-term market fluctuations. As Ole Hansen, head of commodity strategy at Saxo Bank, pointed out, investor concerns about the level of US debt and the softer dollar are driving the market combined with fresh technical momentum buying above gold's key 200-day moving average level.
Gold is now trading above all its key moving averages, with the 200-day moving average currently around $4,513.23. Speculators who trade on technical signals regard a break above key moving averages as a bullish signal.