Gold Extends Rally Amid US Dollar Weakness and Rising Yields

Gold prices continue to rise on Monday, building on last week's strong rally following the US Treasury's announcement of increased liquidity-support buybacks for longer-dated government bonds. The price is up nearly 0.90% on the day, reaching levels not seen since May 15. This move has weighed heavily on the US Dollar, causing it to plummet to a three-month low.

Strategists at OCBC note that 'USD debasement has re-emerged as a market theme' following the buyback announcement, signaling discomfort with recent rises in long-dated yields. They add that this move has likely reinforced other debasement trades, including a weaker US Dollar, a rebound in gold, and higher US inflation breakevens.

However, despite the Treasury's efforts to boost bonds, long-term US Treasury yields remain elevated, which could put a brake on Gold's advance. The 30-year Treasury yield is currently trading around 5.24%, close to its recent 19-year high of 5.33%.