Wall Street bereft of bears after gold smashes $4,600/oz, Main Street bolsters bullish majority with Warsh, PCE in focus

Gold prices surged to their third straight weekly gain, as concerns over U.S. debt sustainability, a weaker dollar, and the Treasury Department’s surprise move to expand long-dated bond buybacks helped the precious metal break above $4,600 per ounce. Spot gold kicked off the week trading at $4,381.12 per ounce on Sunday evening, and pushed higher Monday as traders continued to buy the previous week’s rebound. The move stalled Tuesday as long-dated Treasury yields climbed and the U.S. dollar held firm, with spot prices ultimately setting their weekly low at $4,324.49 per ounce early Wednesday morning. Gold’s breakout came just a few hours later when the U.S. Treasury announced that it would double the size of buybacks for 10- to 30-year debt securities to at least $4 billion per operation, a move that briefly drove long-end yields lower and intensified concerns about the sustainability of U.S. borrowing as total public debt neared $40 trillion. The dollar weakened after the announcement, and gold surged above $4,500 as investors moved into hard assets. The rally extended Wednesday afternoon when the July FOMC minutes showed policymakers still focused on inflation but unlikely to deliver further rate hikes in the near term. Gold held above $4,500 on Thursday, then accelerated again through Friday’s trading session as fiscal worries, dollar weakness, and renewed precious-metals demand outweighed stronger U.S. services PMI data and rising yields. Spot gold ultimately set its weekly high at $4,632.14 per ounce on Friday afternoon and held above $4,600 per ounce at the weekly close.

The latest Kitco News Weekly Gold Survey showed Wall Street bereft of bears after gold’s late-week surge, while Main Street sentiment shot higher into bullish territory. “Gold rose for the third consecutive week,” said Marc Chandler, managing director at Bannockburn Global Forex. “It poked above $4600 at the end of the week. Gold overcome the 200-day moving average for the first time in two months and surpassed the 38.2% retracement of its losses from the record high in March. A convincing move above $4600 targets the $4680 area.” “The fundamental driver appeared to be what is perceived by many as another attempt by the US Treasury to suppress the rise in long-term yields without reducing issuance,” Chandler noted. “Still, momentum indicators are stretched, and participants should be on watch for some kind of technical signal of a reversal or consolidation.” “Up,” said Darin Newsom, senior market analyst at Barchart.com. “Why? Well, I tried to buck the trend last week and that didn’t turn out so well. The bottom line is, as my Rule #6 reminds us, fundamentals win in the end, and as long as central banks around the world continue to buy, gold is fundamentally bullish.” “The other bottom line is this past week showed why the rest of the world continues to sell the United States,” Newsom said. “Given this isn’t going to change any time soon, gold (and silver) should stay fundamentally bullish for the foreseeable future.” “Higher,” said Adam Button, head of currency strategy at investingLive. “The U.S. 'strong dollar' policy is dead and Bessent is flailing.” “Up,” said Adrian Day, president of Adrian Day Asset Management. “The short-term effect of US Treasury Secretary Bessent’s decision to increase buybacks of long bonds will fade, but the fundamental problems this Operation Twist exposes will not.” “Bessent has decided to attempt to save the bond market at the expense of the dollar,” Day said, “and this is positive for gold.” “Up,” said Rich Checkan, president and COO of Asset Strategies International. “Forget about a war or peace premium. Forget about interest rates for now. Treasury Secretary Scott Bessent vowed to at least double the buybacks of long-dated U.S. Treasuries. In other words, he plans to at least double the current pace of buying debt with new debt.” “This is incredibly inflationary as he is planning to expand the m...