Gold Price Breakout May Be Underway as Dollar Weakness Accelerates

The US dollar's debasement trade is back in focus as gold prices recover from mid-year lows. Gold currently trades at $4,381.70, still below its February high of $5,600.

Despite high US borrowing costs, gold has remained resilient, and traders are now focusing on fiscal deterioration, currency dilution, and policy uncertainty.

As the latest Treasury numbers show, the US posted a record $432 billion July budget deficit, taking the fiscal-year shortfall to $1.80 trillion. Net interest expenses have risen 11% this fiscal year and have surpassed both National Defence and Medicare spending.

According to Hansen, 'The danger is not simply the size of the debt, it is the rising cost of carrying it.' If US rates eventually fall while deficits remain enormous, hard assets could become attractive. Gold carries no sovereign credit risk, cannot be printed to finance deficits, and sits outside the banking system's liability structure.

A sustained break above $4,400 would reassert the uptrend just as the Dollar Index threatens deeper support below 100. If gold clears $4,400 while the dollar keeps weakening, capital could move very quickly.