Gold tops $4,600 as Treasury buybacks pressure dollar

Gold topped $4,600 an ounce and Brent held above $94 as the dollar slid to a three-month low, pointing to inflation risk and fiscal unease.

Gold rose through $4,600 an ounce on Aug 21, up nearly 5 percent for the week, as Treasury buybacks weakened the dollar.

"The debt mountain concern remains one of the pillars of gold demand, and any attempts to manage that burden not involving a reduction of debt or deficits are likely to continue favouring gold," Johan Palmberg, senior quantitative analyst at the World Gold Council, said.

Spot gold settled at $4,603.30 an ounce, up 1.99 percent on the day, while December futures closed at $4,661.60, according to market data. The Treasury announced Aug 19 it would double buybacks of 10- to 30-year government debt to at least $4 billion per operation, pushing yields and the dollar lower. The greenback traded around $1.27 per euro, down from about $1.28 at the start of the week.

Gold last traded above $4,600 in May. The next key event is the Federal Reserve's Jackson Hole symposium, where policymakers may offer further clues on the direction of monetary policy. Saxo Bank's Ole S Hansen sees the next resistance at $4,770, the 0.5 Fibonacci retracement of the January-to-June correction.

Treasury Buybacks Push Gold Through $4,600

The Treasury's expanded buyback program initially pushed yields lower and weighed on the dollar. Lower yields on government bonds reduce the opportunity cost of holding gold, which pays no interest. A weaker dollar also makes the metal cheaper for buyers using other currencies.

The move comes as US federal debt surpassed $40 trillion, doubling in less than a decade. Mohamed El-Erian, Cambridge University economist, called the Treasury's action "not yield-curve control but it might be a step in that direction."

Palmberg outlined three ways gold could benefit if the US moves toward yield-curve control: a weaker dollar, lower real interest rates, and investor demand for protection against financial repression. Gold ETFs added 18 tons on Aug 21, the strongest one-day inflow since September 2025, according to Bloomberg data.

Central banks continued aggressive buying in the second quarter, with purchases hitting a quarterly record, according to the Official Monetary and Financial Institutions Forum. Bank of America's Global Fund Manager Survey showed a net 16 percent of managers now view gold as undervalued, the highest reading since March 2023.

Brent Holds Above $94 as Middle East Risks Persist

Brent crude ended the week above $94 a barrel, on track for a second straight weekly gain, as renewed tensions between the US and Iran raised concerns over Middle Eastern supplies. WTI settled at $86.64 a barrel, down 0.22 percent.

The concurrent rise in gold and oil while the dollar weakens is an unusual signal. High US yields failing to support the greenback points to rising inflation expectations and growing unease over the fiscal trajectory, a combination that could pressure US equities and bonds while supporting commodities broadly.

Silver rose 1.32 percent to $68.99 an ounce, while platinum gained 2.40 percent to $1,881.10 and palladium advanced 1.11 percent to $1,353.25.

This article is for informational purposes only and does not constitute investment advice.