Treasury Plan Sends Gold Prices Soaring to Multi-Month High
Gold prices surged to a multi-month high after a surprise announcement from the US Treasury. The plan to expand buybacks of long-dated government bonds pushed yields lower, hammered the dollar, and made alternative stores of value more attractive.
The move triggered a significant increase in gold prices, with spot rates touching $4,631.99 on Friday before settling at $4,623.94. The momentum carried into Monday, when the metal reached an intraday high of $4,641.27 per ounce.
The dollar's weakness is the key driver behind the rally. A softer greenback makes dollar-denominated commodities cheaper for overseas buyers, and the shift has been dramatic. In fact, gold jumped 3.6 percent to $4,487.91 in a single session after the Treasury's initial liquidity-support announcement.
The August comeback in numbers is impressive, with Reuters pegging the rebound at roughly 9 percent. This marked a sharp reversal from the preceding sell-off triggered by the Iran conflict.