As the dollar declines due to bond sell-offs, gold prices rise more than 5% for the week.
Due to a decline in the U.S. dollar and a prolonged sell-off in longer-term Treasury notes, gold prices on Friday were near three-month highs and on course for weekly gains of more than 5%.
Spot gold increased 2.1% to $4,617.23/oz at 16:01 ET (20:01 GMT), while gold futures increased 2.2% to $4,673.84/oz. The former was up 5.6% while the latter was up 5.4% for the week.
The week's major story in bond markets
Participants in the precious metal market have been concentrating on the fixed-income sector this week.
Prior to Wednesday, there had been a sell-off in longer-term U.S. Treasury bonds in particular since the Federal Reserve's July interest rate decision. This sell-off was caused by worries about inflation brought on by rising oil prices as well as the enormous amount of debt that mega-cap firms were issuing to finance their investments in artificial intelligence infrastructure. On Tuesday, the benchmark 10-year yield reached a new 52-week high of 4.748%, while the 30-year yield reached a 19-year high of 5.337%.
Due to recent economic data that lowered expectations of impending Fed rate hikes, shorter maturities have fared substantially better.
The U.S. Department of Treasury then said on Wednesday that it will raise the amount of long-term government debt repurchases from $2 billion to at least $4 billion. Yields fell as a result of the unexpected action, which caused long bonds to increase. But a large portion of that gain was erased on Thursday and Friday, indicating that traders viewed the action as merely a temporary fix. The announcement that the U.S. debt had surpassed $40 trillion further raised fiscal concerns.
Spot gold increased 2.1% to $4,617.23/oz at 16:01 ET (20:01 GMT), while gold futures increased 2.2% to $4,673.84/oz. The former was up 5.6% while the latter was up 5.4% for the week.
The week's major story in bond markets
Participants in the precious metal market have been concentrating on the fixed-income sector this week.
Prior to Wednesday, there had been a sell-off in longer-term U.S. Treasury bonds in particular since the Federal Reserve's July interest rate decision. This sell-off was caused by worries about inflation brought on by rising oil prices as well as the enormous amount of debt that mega-cap firms were issuing to finance their investments in artificial intelligence infrastructure. On Tuesday, the benchmark 10-year yield reached a new 52-week high of 4.748%, while the 30-year yield reached a 19-year high of 5.337%.
Due to recent economic data that lowered expectations of impending Fed rate hikes, shorter maturities have fared substantially better.
The U.S. Department of Treasury then said on Wednesday that it will raise the amount of long-term government debt repurchases from $2 billion to at least $4 billion. Yields fell as a result of the unexpected action, which caused long bonds to increase. But a large portion of that gain was erased on Thursday and Friday, indicating that traders viewed the action as merely a temporary fix. The announcement that the U.S. debt had surpassed $40 trillion further raised fiscal concerns.
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