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Gold extends rally as US liquidity buybacks weaken the dollar
XAU/USD was around $4,644, up nearly 0.9% on the day, as the US Dollar Index fell to a three month low and safe haven demand picked up.
Gold prices extended their advance on Monday, building on last week’s surge after the US Treasury announced higher liquidity-support buybacks for longer-dated government bonds, FXStreet said. At the time of writing, XAU/USD was near $4,644, up nearly 0.9% on the day and at levels last seen on May 15.
The Treasury’s move weighed on the Greenback, sending the US Dollar Index (DXY) to a three-month low, which boosted gold by making it cheaper for holders of other currencies. The metal also drew additional safe-haven demand as investors raised concerns about US fiscal policy and rising government debt, FXStreet reported.
Still, elevated long-term Treasury yields may limit further gains, the outlet noted. The 30-year Treasury yield was around 5.24%, close to a recent 19-year high of 5.33%, which can raise the opportunity cost of holding non-yielding gold.
Market focus then shifts to US event risks later in the week, including the July Personal Consumption Expenditures (PCE) Price Index and remarks from Federal Reserve Chair Kevin Warsh at the Jackson Hole Symposium, according to FXStreet. The report added that US preparations for fresh sanctions against Iran could also keep energy-driven inflation risk in view, while the metal stayed supported above its 200-day and 100-day moving averages.
Latest closeGold $4,432.00 ▲1.6%|Dollar index 99.64 ▼0.3%