Gold has climbed to its highest level in over two months, gaining more than 4% following U.S. Treasury liquidity support announcements that weakened the dollar and Treasury yields.
Gold prices have surged to near a two-month peak, with spot gold trading around $4,512.19 per ounce as of Thursday. The precious metal posted gains exceeding 4% on Wednesday, climbing to its highest point since early June at $4,525.79. December gold futures rose 0.6% to $4,569.80, extending the rally.
The price movement was driven by the U.S. Treasury Department's announcement to double the size of its liquidity-support buyback operations for longer-dated notes and bonds. This measure pushed Treasury yields lower and weakened the U.S. dollar, making gold comparatively cheaper for international buyers. Market participants are also monitoring growing concerns over America's fiscal health, following the Treasury's disclosure that total U.S. debt has exceeded $40 trillion for the first time.
Federal Reserve policy signals added complexity to the outlook. Minutes from the central bank's latest meeting indicated that several policymakers were prepared to consider interest rate increases, with many suggesting rates might need to rise if inflation does not move toward the Fed's 2% target. According to the CME FedWatch Tool, market traders are currently pricing in a 67.3% probability of no rate change in September, with a 32.7% chance of an increase. Rising interest rates typically reduce gold's appeal as an investment since the metal generates no interest income.
Among other precious metals, spot silver rose marginally by 0.2% to $67.06 per ounce, while platinum declined 0.4% to $1,816.78. Palladium gained 0.3% to $1,339.05.
