Gold advances to three-month high as debasement trade returns

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Photo by Daniel Acker/BloombergGold climbed to the highest in more than three months as the United States Treasury’s bold intervention in the bond market revived concerns about fiscal policy and its impact on the dollar.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountBullion rose as much as 1.7 per cent to above US$4,680 an ounce, the highest intraday level since mid-May. The metal capped a third weekly gain last week, advancing more than five per cent after the Treasury announced a surprise ramp-up in buybacks of long-dated government debt. The move temporarily sent long-term yields lower, as well as weighing on the dollar.The efforts to control the cost of the U.S. debt pile through direct intervention renewed worries about inflation and dollar weakness, a return to the so-called debasement theme that helped drive gold’s 65 per cent rally in 2025.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try again“I see scope for macro money to pivot quite heavily into precious metals on the back of this currency debasement narrative,” said Justin Lin, an analyst from Global X ETFs.Even after the unexpected announcement on Wednesday, Treasury Secretary Scott Bessent went further by saying he’s prepared to expand buybacks of costlier debt. He also flagged that the administration would soon unveil a fiscal initiative to address the highest borrowing costs in years.Gold-backed exchange-traded funds tracked by Bloomberg added more than 28 tons last week, the most since January, when a blistering rally sent gold to a record just below US$5,600 an ounce. The inflows show an encouraging trend of broadening investor participation, said Christopher Wong, a strategist at Oversea-Chinese Banking Corp.“The rally has room to run, although some consolidation after the recent sharp move would be healthy,” Wong said. The main near-term risks are a renewed rise in real yields or the U.S. dollar, he added.Billionaire Ray Dalio said investors should reduce their bond holdings and put as much as 15 per cent of their money in gold to hedge against the risk of a U.S. debt crisis.In a sign of renewed momentum, investors have rushed to bet on further price gains using call options. Total call open interest on SPDR Gold Shares, the largest gold-backed ETF, has surged in recent weeks to reach the highest level since March.The large volume of outstanding options will likely amplify volatility going forward, analysts at Goldman Sachs Group Inc wrote in a note Friday, as dealers are forced to respond to prices moves by buying or selling the underlying ETF in order to hedge their exposure.Gold was 0.8 per cent higher at US$4,638.88 an ounce as of 1:30 p.m. in New York after adding 1.9 per cent on Friday. Silver slipped 0.6 per cent to US$68.52 an ounce. The Bloomberg Dollar Spot Index, a gauge of the dollar, gained 0.2 per cent after falling to its lowest in more than three months in the previous session.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.