Gold Surges Above $4,500 as US Dollar Weakens
The price of Gold has surged to its highest level since early June, climbing above $4,500 in the early Asian session on Thursday. This increase comes as the US Dollar weakens and long-term borrowing costs rise.
The US Treasury Department's announcement that it will at least double the maximum size of its liquidity-support buyback operations for longer-dated nominal securities has provided a 'jolt of life' to gold investment, according to TD Securities. The bank believes that this support, combined with the Federal Reserve's willingness to look through an energy shock and rising stagflation fears, should lead to lower real rates.
A technical analysis from TD Securities suggests that Gold retains a bullish near-term bias, holding above its 20-period Bollinger simple moving average and 100-day simple moving average. However, the Relative Strength Index (14) indicates overbought conditions, which could temper immediate upside momentum.