Gold hits three-month high as dollar weakens, Treasury buyback caps yields
By Aboki Forex —
Gold prices climbed to their highest level in over three months on Tuesday, buoyed by a softer U.S. dollar and U.S. Treasury bond buyback plans that kept yields in check. The metal gained 0.6% to $4,677.19 per ounce, its strongest since mid-May.
UOB said gold was on track "for its strongest monthly gain since September 1999." The yellow metal is up more than 15% so far this month. Gold futures also rose 0.5% to $4,720.3, also a more than three month high.
Silver and dollar action
Strength in gold spilled over to silver, which gained 0.4% to $69.19 per ounce. A softer dollar makes greenback-priced gold more attractive to holders of foreign currencies, while lower Treasury yields reduce the opportunity cost of holding bullion.
The dollar index has lost 0.8% so far this month. Treasury yields have stayed elevated for most of August, but the government's bond buyback plan has kept a lid on them, down 3 basis points this month.
Jackson Hole in focus
Investors are now watching the upcoming speech by U.S. Fed Chair Warsh ahead of the Jackson Hole Symposium later this week. They want clearer clues on the outlook for interest rates.
A hawkish Warsh speech could halt the ongoing gold rally. But a dovish surprise at Jackson Hole would be ultra-bullish for gold, Citi said, "as the market will not only continue to price out Fed rate hikes but also refocus on the debasement trade amid renewed concerns on Fed independence and US debt sustainability issues."