Gold Hits 3-Month High, Surpassing $4,600, Buoyed by a Weak Dollar

Gold prices rose sharply during Friday’s trading session, on track to post gains for the third consecutive week, after the precious metal climbed to its highest level in more than three months, supported by a weak U.S. dollar, improved technical factors, and growing concerns about the financial situation in the United States.

The price of gold managed to break above the 200-day moving average, a technical signal that bolstered the precious metal’s upward momentum, while the U.S. Treasury Department’s surprise announcement regarding liquidity support for the bond market contributed to increased demand for gold midweek.

Gold Price Rises Above $4,600 per Ounce

The price of gold posted a strong gain today of more than 1.5%, reaching $4,600 per ounce—its highest level since May 15. U.S. gold futures also rose to around $4,645 per ounce.

As a result, gold has posted gains of nearly 5% since the start of the week, after recording its biggest single-day gain on Wednesday since early February.

Despite the strong momentum, gold faced some profit-taking during Thursday’s session, ending the day with a slight decline as U.S. Treasury yields rose following a sharp sell-off in the bond market.

A Weak Dollar Supports Rising Gold Prices

Gold benefits directly from a decline in the U.S. dollar, as the weakness of the greenback makes the precious metal less expensive for investors holding other currencies, thereby boosting demand for it in global markets.

Recent developments in the U.S. bond market have also contributed to gold’s appeal, particularly following U.S. Treasury Secretary Scott Bessent’s intervention to support liquidity and attempt to ease pressures on the debt market.

This intervention led to strong movements in the precious metals markets, with gold and silver prices rising significantly over the course of the week.

Rising Bond Yields Pose a Challenge for Gold

Despite gold’s strong gains, U.S. Treasury yields remain one of the most significant challenges to the continuation of the uptrend.

Typically, rising bond yields reduce the appeal of gold an asset that does not provide a yield to its holder—as investors become more inclined toward assets that offer fixed returns.

U.S. Treasury yields remain near their highest levels in more than a decade, despite government efforts to curb rising borrowing costs.

However, concerns about the U.S. fiscal situation and the sustainability of government debt appear to be supporting demand for gold as one of the most important safe-haven assets.

Central Banks Continue to Support Demand for Gold

Strong demand from central banks remains one of the key factors underpinning the positive outlook for gold prices in the medium to long term.

The World Gold Council’s annual survey of central bank gold reserves showed that the majority of respondents expect gold reserves to continue to increase over the coming year.

The survey results indicate that 89% of participants expect global central bank gold reserves to rise, while 45% of institutions expect to increase their holdings of the precious metal a record high compared to previous years.

This reflects central banks’ continued trend toward diversifying reserves and reducing reliance on the U.S. dollar, which provides long-term support for the gold market.

Rising Oil Prices May Put Pressure on Gold Prices

Despite the strength of the current uptrend, gold faces some near-term risks, particularly as oil prices rise due to ongoing tensions and conflict in the Middle East.

Continued increases in energy prices could intensify inflationary pressures, which might prompt central banks to adopt a more cautious stance regarding interest rate cuts.

If inflation remains at high levels, bond yields may stay high or continue to rise, which could put pressure on gold prices.

Upcoming Outlook for Gold Prices

Overall, gold faces a mix of conflicting factors in the coming period. On the one hand, the precious metal is benefiting from a weak dollar, concerns about the U.S. economy, continued demand from central banks, and a technical improvement after breaking above the 200-day moving average.

On the other hand, continued rises in Treasury yields and oil prices could put additional pressure on gold, especially if inflation forces central banks to delay interest rate cuts.

Following the precious metal’s strong gains this week, gold may need a period of consolidation or profit-taking before determining its next direction.

The movement of the U.S. dollar, bond yields, oil prices, and geopolitical developments will remain among the most important factors influencing gold prices in the coming period.