Investment Demand Behind Gold's Recent Rally, Not Treasury Move

A recent surge in gold prices to $4,700 an ounce was driven primarily by investment demand rather than the U.S. Treasury's decision to expand its bond buybacks, according to Krishan Gopaul, senior analyst for EMEA at the World Gold Council.

Gopaul said that while the buyback announcement accelerated an existing trend, it wasn't a new catalyst in itself. The backdrop of debt concerns in the U.S. and elsewhere likely contributed to the price increase.

Investment demand has strengthened since July, with global physically backed gold ETFs recording $3 billion in net inflows that month, followed by a further $17 billion in August.

Central bank buying is an important underlying pillar of the market but not the principal catalyst for the latest rise, Gopaul said. He expects official sector purchases to stay strong this year but below 2025's level.