Sanctions and Debt Deals Spark Oil and Gold Surge

The US Treasury Secretary Scott Bessent announced plans to expand buybacks of costlier long-dated debt, and confirmed a new fiscal initiative is coming to address the highest borrowing costs in years. The move comes as US debt crossed $40 trillion for the first time, with yields near multi-decade highs.

The announcement led to a sharp fall in long-dated yields, causing the dollar to slide to a two-month low of 98.5. This sent gold prices surging, with spot gold closing above $4,600 an ounce for the first time since mid-May, up roughly 5 percent on the week.

The sanctions threat against Iran is also pushing oil prices higher, with Brent crude approaching $95 a barrel and WTI clearing $89 a barrel. China has cut its August imports of Iranian crude, and a meaningful volume of unsold oil is reportedly stranded near Southeast Asian waters due to the US blockade.