Gold Soars to New Highs as US Treasury Buyback Plan Weighs on USD

Gold prices surged to their highest level since May 15, reaching around $4,625 during Asian trading hours on Monday. The precious metal's gains were attributed to the US Treasury's buyback support plan, which has cooled treasury yields and dragged down the US Dollar (USD). As gold is priced in USD, a weakening currency makes it cheaper and more attractive to foreign buyers.

Bart Melek, global head of commodity strategy at TD Securities, noted that technical factors are playing a significant role in gold's momentum. However, he also highlighted the drop in the US dollar as a key driver of gold's price increase. If this momentum continues, Melek predicts that the next target for gold could be $4,700.

While gold has been benefiting from the weakening USD and buyback support plan, energy-driven inflation concerns and potential Federal Reserve rate hikes may cap its upside. Gold is often used as a hedge against inflation but does not yield interest, making it less attractive when interest rates are high.