Gold Surges to Three-Month High as ETF Buyers Return and Dollar Credibility Falters

The gold price has surged to a three-month high after posting its third consecutive weekly gain. The increase in gold ETF holdings and demand for call options have driven this surge, with institutional strategists identifying Treasury actions as a key catalyst.

Gold ETF holdings saw their largest daily rise since September 2025 on Thursday, increasing by 18 tonnes. This marks the fifth consecutive week of net inflows, with weekly capital inflows being the fastest since January this year.

The U.S. Treasury's move to ramp up repurchases of long-term Treasury bonds has heightened market concerns about the dollar's creditworthiness, driving a sharp rally in gold prices. Goldman Sachs analyst Lina Thomas stated that demand for gold call options has surged, increasing the risk of sharp price swings.

The core narrative underpinning the long-term bull run in gold is the 'currency devaluation trade', which holds that highly indebted countries will relax fiscal discipline and rely on inflation and currency depreciation to maintain their debt-servicing capacity. MKS Pamp's metals strategist, Nicky Shiels, wrote that 'currency-depreciation trades have made a comeback, both as an operational strategy and as a thematic narrative'.