Gold Heads for Third Weekly Gain Supported by Weaker Dollar and Lower US Yields

Gold prices edged higher on Friday, setting the metal on track for its third consecutive weekly gain. The upward movement was supported by a weaker dollar and the US Treasury's bond buyback move.

Spot gold was up 0.5 per cent at $4,540.18 per ounce by 0254 GMT, following a session where it hit its highest level since early June. Prices have climbed 3.6 per cent over the week. Meanwhile, US gold futures rose 0.6 per cent to $4,596.60.

Brian Lan, managing director of GoldSilver Central, noted that the weakening dollar and a big change in yields have supported not just gold, but all precious metals.

The dollar headed for a weekly loss, which made greenback-priced bullion more affordable for overseas buyers. US Treasury Secretary Scott Bessent stated that he may further increase the government's repurchases of Treasuries. The Treasury announced on Wednesday that it would double the size of buybacks on longer-dated securities over the next quarter to at least $4 billion per operation. Two Federal Reserve officials expressed caution regarding how these debt management changes could affect the US central bank's monetary policy stance.

Lan added that gold's future trajectory will be determined by Federal Reserve decisions and how those policies impact market rate expectations.

Economic data released on Thursday showed that the number of Americans filing claims for unemployment benefits slipped last week. This suggests the labor market remains stable despite a surprise drop in employment in July, leaving the Fed focused on containing inflation. According to the CME FedWatch Tool, traders are currently pricing in a 64 per cent chance that the Fed will keep rates unchanged next month and a 36 per cent chance of a hike.

While gold is typically viewed as an inflation hedge, higher interest rates tend to diminish bullion's appeal due to its non-yielding characteristic.

On the geopolitical front, Bessent announced that the United States will impose the toughest sanctions in history on Iran.

Other precious metals also saw gains and were headed for weekly finishes in the green. Spot silver rose 1.3 per cent to $68.92 per ounce, platinum climbed 2.4 per cent to $1,872.64, and palladium gained 1.3 per cent to $1,351.28.

"The recent climb in gold prices highlights how macroeconomic factors such as currency fluctuations, Treasury debt management, and interest rate expectations directly influence commodity markets. For businesses and investors navigating global economic shifts, monitoring central bank policies and currency trends remains critical when assessing asset valuations and market stability." — Dr. Shishir Gupta, Founder & CEO, StartupLanes