Gold Rebounds as US Fiscal Concerns Mount

The price of gold has rebounded sharply from its July lows, driven by renewed investment demand and growing unease over the US fiscal outlook. Gold's resilience suggests that the rally is not just a response to lower yields, but also reflects concerns about government borrowing and currency debasement.

The US Treasury's decision to increase its purchases of longer-dated government debt has refocused attention on government borrowing and fiscal credibility. The maximum size of buyback operations in the 10-to-30-year segment will rise from $2bn to at least $4bn, with Treasury Secretary Scott Bessent signalling that the programme could be expanded further.

Central banks remain a significant source of demand, with reported net purchases reaching 51 tonnes in June and taking the first-half total to 102 tonnes. Western investors are also showing renewed interest in gold, with ETFs attracting $3bn in July and adding 23 tonnes to their holdings.