Gold Soars Amid Dollar Weakness and Rising Inflation

The US dollar has rebounded somewhat after Treasury's intervention plans in the bond market to control yields, but investors remain skeptical about their effectiveness. As a result, confidence in the greenback is being eroded.

Strong inflation data has further supported the dollar. In July, the Personal Consumption Expenditure Price Index (PCE) rose by 3.7% year-over-year, while the core PCE stood at 3.3% year-over-year, both significantly above the 2% target.

However, renewed pressure from the White House on the Fed has triggered a 'debasement trade', where investors move away from currencies and bonds in favor of assets like precious metals and cryptocurrencies.

In response to this trend, gold-focused ETFs have attracted around $7 billion over the past five days. State Street Investment Management's SPDR Gold Shares ETF alone saw inflows of approximately $3.4 billion.