Gold has rallied to a three-month high, partly driven by a fall in the value of the US dollar and a selloff in bond markets. The safe haven asset climbed 1.31% this afternoon to $4,575, having reached $4,601 earlier in the day – its highest since 15 May.
Bond market turmoil
The move comes after government borrowing costs around the world surged to the highest levels in decades amid growing fears over US bond market turmoil. Anxiety about Donald Trump’s handling of the economy, and concern that his war with Iran is driving up inflation, have sparked a sell-off in the US bond market.
US Treasury Secretary Scott Bessent signalled on Thursday that he could ramp up government bond buybacks even further. That came after the department announced on Wednesday it would double the size of its buybacks on longer-dated securities, sending the 30-year yield sharply lower.
Dollar weakness boosts gold
The US dollar’s slide boosted the precious metal further. The dollar was 0.01% down against the pound at 73.3p and 0.04% down against the euro at 85.5 cents on Friday afternoon.
Ole Hansen, head of commodity strategy at Saxo Bank, wrote: “Gold surged again after a setback on Thursday as long-end Treasury yields climbed following a Bessent interview that failed to quell investor concerns about spiralling U.S. debt and fiscal sustainability.”
