Gold Surges Past $4,630 Amid Currency-Debasement Trade Fears

Gold prices surged past $4,630 an ounce on Thursday as investors continued to bet on a 'currency-debasement trade'. Despite hotter-than-expected US inflation data, concerns over US debt and Treasury intervention remain high, outweighing the prospect of higher Federal Reserve interest rates.

The latest advance comes after the Treasury said it would at least double liquidity-support buybacks for longer-dated government bonds to $4 billion per operation from September 9. This move is intended to improve market liquidity rather than permanently suppress yields, but it has intensified investor debate over US fiscal policy and the dollar's purchasing power.

According to ANZ Research analysts, demand for gold continues to benefit from the dollar-debasement trade, even as higher interest rates remain a potential constraint. The concern is broader than one Treasury programme, with investors increasingly using bullion as protection against persistent deficits, rising government borrowing, and uncertainty over how policymakers intend to manage elevated long-term yields.

Wednesday's inflation report, which showed the PCE price index rose 0.2% in July and 3.7% from a year earlier, slightly above expectations, complicated the bullish argument for gold. Rate markets responded by increasing the probability of a September hike to about 44%, from roughly 36% before the report.