Gold Surges to Three-Month High on Treasury Yield Drop

Gold prices surged to a three-month high on Tuesday, reaching $4,696.18 an ounce, as investors turned to safe-haven assets amid falling Treasury yields. The SPDR Gold Shares ETF (GLD) saw heavy trading, with nearly 40 million shares changing hands and closing at $428.10, up 0.33%. Fund creations added weight to the price move, with GLD accounting for $1.2 billion of the $1.3 billion in reported daily inflows into metals ETFs.

The rally is not just a futures story, as GLD's Tuesday turnover equaled about $17.1 billion at the closing price, showing how quickly macro demand moved through a liquid U.S. vehicle. Physical demand also provided support, with China's net gold imports through Hong Kong rising 11% in July to 56.193 metric tons.

However, the rally is not without risks. A stronger PCE print could revive real yields and challenge the gold trade, while profit-taking may accelerate after August's gain. Easing geopolitical tension would also weaken safe-haven demand.