Gold Soars to Three-Month High as Dollar Weakens and Treasury Buys More Bonds
Gold prices surged to a three-month high on Friday, extending gains for the third straight week. The metal's value increased by 2% to $4,603, with its weekly gain reaching 5%. This upward trend was supported by a weaker US dollar and the US Treasury's decision to double the size of buybacks of longer-dated Treasury securities.
The rally in gold prices can be attributed to several factors. The weakening US dollar makes dollar-priced commodities more affordable for buyers holding other currencies, while the Treasury's bond buyback move is aimed at keeping longer-term yields under control. This reduction in bond yields reduces the opportunity cost of holding non-yielding assets like gold.
Billionaire hedge fund manager John Paulson and Jefferies' Global Head of Equity Strategy Christopher Wood believe that the recent pullback in gold prices may have created an opportunity for investors to accumulate the metal. According to Paulson, demand for bullion is broadening, driven by central banks adding to their reserves and rising interest from the private sector.