Gold Extends Rally as Fiscal Concerns Boost Bullion by Amit Gupta, Kedia Advisory
Gold climbed to around $4,660 an ounce, reaching a three-month high as concerns over US fiscal sustainability revived the debasement trade. The rally accelerated after Treasury Secretary Scott Bessent announced that longer-dated Treasury buybacks would rise to at least $4 billion per operation, initially pushing yields and the dollar lower. Gold has gained around 15% since breaking out of its month-long consolidation in early August. Geopolitical risks surrounding Iran sanctions and potential oil-supply disruptions are adding further support. Focus now shifts to July PCE inflation and Federal Reserve Chair Kevin Warsh’s Jackson Hole speech. Technically, $4,772-$4,800 is the next major resistance zone.
Key Highlights
• Gold climbed to around $4,660, hitting a three-month high amid renewed fiscal concerns.
• Gold has gained nearly 15% since breaking above its month-long consolidation in early August.
• Treasury buybacks increased to at least $4 billion per operation, weakening yields and the dollar.
• Iran sanctions could lift oil prices, adding inflation risks while strengthening safe-haven demand.
• Gold faces resistance at $4,772-$4,800, with $5,000 possible.
Gold extended its rally to around $4,660 an ounce, reaching a three-month high as investors reassessed US fiscal risks, Treasury yields and monetary policy. The metal has gained around 15% since breaking out of its month-long sideways range in early August, putting it on track for its strongest monthly advance if momentum persists.
The latest leg higher followed Treasury Secretary Scott Bessent’s decision to increase buybacks of longer-dated Treasury securities to at least $4 billion per operation. The announcement initially pushed the 30-year Treasury yield lower and weakened the US dollar, creating a strong tailwind for bullion. Falling yields reduce the opportunity cost of holding non-yielding gold, while a weaker dollar improves affordability for international buyers.
However, long-term yields have recovered part of their decline and remain elevated, with the 30-year yield around 5.25%. US government debt has surpassed $40 trillion, while persistent deficits and elevated interest costs continue to fuel concerns about fiscal sustainability. This environment is supporting the debasement trade, as investors seek hard assets as protection against potential inflation and currency depreciation.
Geopolitical risks are providing additional support. The Trump administration is preparing further sanctions on Iran, raising concerns about disruptions to Iranian oil supplies and potentially higher energy prices. Higher oil prices could reinforce inflation pressures, while geopolitical uncertainty may simultaneously increase safe-haven demand for gold.
Attention now turns to the July PCE inflation report and Federal Reserve Chair Kevin Warsh’s Jackson Hole speech. A dovish tone could reinforce expectations for lower rates, while hawkish guidance could lift real yields and temporarily pressure gold.
Technically, gold has cleared the $4,596 May peak and 200-day SMA. Resistance stands at $4,772-$4,800, followed by $4,842-$4,892. A sustained break could target $4,968 and the psychological $5,000 level.
Gold’s bullish structure remains intact as fiscal concerns, geopolitical risks and weaker-dollar expectations support demand, with $5,000 emerging as a potential upside target.
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