Gold Surges to Three-Month High on Weak Dollar and Debt Concerns

Gold prices have surged to a three-month high after breaching its 200-day moving average, driven by a weak dollar and the US Treasury's surprise mid-week liquidity support announcement.

Spot gold climbed 1.5% to $4,587.23 per ounce by 11:01 GMT, having hit $4,601.29 earlier in the session, its highest since May 15. US gold futures rose 1.6% to $4,645.00.

The metal's rally has been driven by investor concerns about the level of US debt and the softer dollar, combined with fresh technical momentum buying above gold's key 200-day moving average level. Ole Hansen, head of commodity strategy at Saxo Bank, said that 'gold surged again after a setback on Thursday as long-end Treasury yields climbed following a Bessent interview that failed to quell investor concerns about spiralling US debt and fiscal sustainability.'

The US Treasury Secretary Scott Bessent signaled he could ramp up government buybacks of Treasuries even further, after the department announced it would double the size of its buybacks on longer-dated securities. Two Federal Reserve officials expressed caution when asked how the Treasury Department's debt management changes could affect the US central bank's monetary policy stance.