Gold's Surge Tied to US Debt Management, Not Safe-Haven Demand

The recent surge in gold prices is not due to traditional safe-haven demand, but rather a result of US debt management mechanics. The Treasury Department's increased bond-buyback operations have triggered a chain reaction that has pushed bullion to its strongest level in over three months.

Spot gold crossed above the $4,600-per-ounce threshold on Friday for the first time since mid-May, touching an intraday high of $4,631.99 before settling at $4,661.60, a 1.9 percent gain on the day.

US Treasury Secretary Bessent's decision to double the size of long-dated bond buybacks has had limited effect in capping rising long-term yields. The 30-year yield remains pinned at 5.31 percent, while the 10-year has crept back up to 4.737 percent.

According to Commerzbank commodity analyst Carsten Fritsch, confidence in the dollar is eroding due to stubbornness in the long end of yields and the escalating annual interest payments on US debt, now at $1 trillion.