Gold Surges to Three-Month High as Weaker Dollar and Bullish Technicals Drive Rally

Gold prices surged to a three-month high on Friday, driven by a weaker US dollar and bullish technical levels. Spot gold rose 2.1% to $4,612.17 per ounce, with earlier touching $4,620.14 - its highest since May 15. Analysts pointed to the break above the closely watched 200-day moving average as an indicator of a bullish trend.

The move was attributed to several factors, including the US Treasury's buyback support plan, which has weighed on the dollar. The plan, announced by US Treasury Secretary Scott Bessent, involves doubling buybacks of longer-dated securities. This has led to a drop in the dollar, making gold more attractive.

The rally was also fueled by increased call option demand, with Goldman Sachs noting that speculative interest in COMEX gold and rate-sensitive gold ETFs has revived due to weaker market conviction around US rate hikes following the Fed's July pause. The bank also pointed out that softer economic data has contributed to this trend.