Gold Climbs Past $4,650 as Dollar Weakens and Treasury Boosts Bond Buybacks

Gold (XAU/USD) climbed to roughly $4,670, reaching its highest level since May 14, during the early Asian session on Wednesday. The advance continues as the US dollar weakens and the Treasury signals expanded bond buybacks.

Last week, Treasury Secretary Scott Bessent indicated the government might push bond buybacks past $4 billion, following the department’s announcement a day earlier to double purchases of longer‑dated securities. The move has pulled long‑term yields lower and sparked extensive short‑covering.

A softer dollar makes dollar‑denominated gold more appealing to foreign‑currency holders, while declining Treasury yields lower the opportunity cost of holding bullion.

The Trump administration also announced an expansion of secondary sanctions that can be levied against firms and nations maintaining business links with Iran worldwide, according to Reuters.

Escalating US‑Iran tensions could fuel energy‑linked inflation worries and increase the likelihood of Federal Reserve rate hikes in the months ahead. This dynamic may limit gold’s upside, as the metal—while an inflation hedge—offers no yield and becomes less attractive when interest rates rise.

Market participants will watch closely for Fed Chair Kevin Warsh’s speech at the Jackson Hole Symposium on Friday, seeking hints on future interest‑rate policy. Any hawkish commentary from Fed officials could pressure gold in the near term.

Gold rally viewed as premature amid persistent energy and rate risks

TD Securities warns that gold’s recent gains could be fragile amid the wider macroeconomic environment. The bank notes that, with markets still factoring in rate hikes for 2027 and energy markets posing a notable risk, it cautions that the current rally may be premature for a fresh push toward record‑high levels.

Technical analysis: Gold maintains bullish tone despite overbought conditions

On the daily chart, XAU/USD shows a bullish near‑term bias, staying above the 100‑day simple moving average (SMA) and the Bollinger middle band, which preserves the broader uptrend. The price is moving into the upper half of the Bollinger bands, with the upper band limiting the latest advance, while the 14‑period Relative Strength Index sits around 73, entering overbought territory and signaling strong but stretched upward momentum.

To the downside, the first support level lies near the 100‑day SMA at about $4,380, followed by the Bollinger middle band around $4,340, with the lower band at roughly $3,955 providing a stronger cushion should a deeper correction occur. On the upside, immediate resistance is found at the Bollinger upper band near $4,725; a daily close above that level could unlock additional upside, while a failure to breach it may trigger consolidation or a retreat toward the aforementioned supports as overbought conditions ease.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Frequently Asked Questions About Gold

Throughout history, gold has served as a store of value and medium of exchange. Beyond its luster and use in jewelry, it is regarded today as a safe‑haven asset—investors turn to it during periods of uncertainty. Gold also functions as a hedge against inflation and currency depreciation because its value is not tied to any single issuer or government.

Central banks hold the largest gold reserves. To bolster their currencies during volatile periods, they diversify holdings by purchasing gold, which enhances the perceived strength of both the economy and the currency. Substantial gold reserves can reinforce confidence in a nation’s solvency. In 2022, central banks added 1,136 tonnes of gold—valued at roughly $70 billion—to their reserves, according to the World Gold Council, marking the largest annual increase on record. Emerging‑market central banks, especially those of China, India, and Turkey, have been rapidly expanding their gold positions.

Gold typically moves inversely to the US dollar and US Treasuries, both major reserve and safe‑haven assets. When the dollar weakens, gold often rises, allowing investors and central banks to diversify during turbulent periods. Gold also shows an inverse relationship with riskier assets; equity rallies tend to depress gold prices, while sell‑offs in risk‑heavy markets usually boost demand for the metal.

Gold’s price is influenced by many factors. Geopolitical tensions or fears of a deep recession can quickly lift its value owing to its safe‑haven appeal. As a non‑yielding asset, gold generally gains when interest rates fall and loses appeal when borrowing costs rise. Ultimately, the US dollar’s movement drives most price changes, since gold is quoted in dollars (XAU/USD); a strong dollar tends to cap gold prices, while a weaker dollar tends to push them higher.

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