Gold Price Rises as Dollar Weakens, Treasury Buybacks Announced

Spot gold price rose on Friday, breaking above its 200-day moving average, as the U.S. dollar weakened and the Treasury Department announced bond buybacks. The precious metal closed at $4,602.99, up $84.04 or 1.86%. Gold reached its strongest level in over three months, hitting a session high of $4,632.15 after trading as low as $4,509.00.

The U.S. Treasury Department said it would at least double buybacks of government bonds with 10- to 30-year maturities. Operations will begin at a minimum of $4 billion each. This announcement came after long-dated yields climbed to multi-year highs and U.S. national debt crossed $40 trillion. The news caused bond yields to drop and the dollar to sell off, which helped gold prices.

The dollar index remained near a three-month low on Friday. Traders also reduced bets on another Federal Reserve rate increase in September after the central bank paused hikes in July. Geopolitical concerns over oil shipping routes and potential new U.S. sanctions against Iran also added support for gold, keeping sellers away.

Spot gold moved back into a retracement zone it had held through April and May, between $4,541.88 and $4,744.34. The metal had fallen from this zone in June. Buyers will need to establish strong support above the 200-day moving average, located at $4,514.22, to confirm a lasting breakout. Future inflation data and Fed commentary will influence the market’s next moves.