Gold Rally Accelerates Amid US Fiscal Concerns, Dollar Weakness
Gold prices have surged to near $4,540 an ounce as investors seek safe-haven assets amid concerns over US fiscal policy. The metal is set for its third straight weekly gain, with silver and platinum also heading upwards. The rally began after the US Treasury announced plans to double liquidity-support buybacks for 10- to 30-year bonds.
The move initially drove long-dated yields lower and weakened the dollar, but the bond-market relief has since faded. The 10-year yield was back near 4.7% on Friday, while the 30-year was around 5.25%. The dollar remains weak, making gold cheaper for buyers outside the US.
Citi strategist Dirk Willer believes the renewed debasement trade strengthens the case for gold, citing fiscal concerns, a softer dollar, and unstable long-term rates as supporting demand for scarce assets. Citi has also flagged scope for bullion to reach $5,000-$6,000 over the next year.
However, Fed policy remains a key constraint on gold's rally. Minutes from the Federal Reserve's July meeting showed deeper concern over inflation, with policymakers discussing further tightening if price pressures failed to move convincingly towards the 2% target.