Gold prices touched a near three-month high on Friday, putting the precious metal on track for its third consecutive weekly gain. The upward movement was supported by a weaker US dollar and the recent bond buyback announcement by the US Treasury.
Spot gold increased 1.0% to reach $4,562.86 per ounce by 0752 GMT, marking its highest level since May 29. Overall, prices have risen 4.2% over the week. Meanwhile, US gold futures advanced 1.1% to $4,620.00.
The decline in the US dollar has made greenback-priced bullion more affordable for international buyers. Supporting this trend, US Treasury Secretary Scott Bessent indicated that the government may further increase its repurchases of Treasuries. This follows the Treasury's announcement on Wednesday to double the size of buybacks on longer-dated securities over the upcoming quarter to at least $4 billion per operation.
Market participants are now closely monitoring upcoming macroeconomic data and the upcoming Jackson Hole Symposium, scheduled for August 27-29, which are expected to influence future yield and currency movements. Additionally, two Federal Reserve officials have expressed caution regarding how the Treasury Department's debt management changes might impact the central bank's monetary policy stance.
According to the CME FedWatch Tool, traders are currently pricing in a 67% probability that the Federal Reserve will maintain interest rates unchanged next month, alongside a 33% chance of a rate hike. While gold is traditionally viewed as an inflation hedge, higher interest rates typically reduce the appeal of bullion because it is a non-yielding asset.
The recent surge in prices has had a mixed effect on physical demand. Retail buyers in India pulled back due to the higher pricing, whereas demand in China remained steady. On the geopolitical front, Treasury Secretary Bessent stated that the US intends to impose new sanctions on Iran.
Other precious metals also saw gains during the session. Spot silver rose 1.8% to $69.31 per ounce, platinum advanced 2.6% to $1,875.75, and palladium increased 1.7% to $1,356.59. All three metals were positioned for weekly gains.
"Fluctuations in global commodity prices and currency valuations often have a direct trickle-down effect on regional markets, including retail demand in India. For businesses and entrepreneurs dealing in physical assets or imports, macroeconomic shifts driven by central bank policies and government debt management require cautious financial planning and robust risk management strategies." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
