Gold Rises Above $4,650 on Weaker Dollar and US Treasury Buyback Program

Spot gold traded near $4,660.95565 during early Asian hours on Wednesday, extending its recent upward momentum. Earlier, the price touched $4,681.11, the highest level since May 14. A weaker dollar and the US Treasury's expanded long-term debt buyback program were the main factors driving this rally.

**Dollar Depreciation Trade Regains Momentum**

The US Treasury expanded its long-term bond buyback program to improve liquidity in longer-dated Treasury markets, but the announcement triggered a notable selloff in the dollar, with the dollar index briefly falling to a three-month low. OCBC strategists noted that this move may reflect policymakers' unease over the recent rapid rise in long-term yields, and the resulting unwinding of steepening curve trades further reinforced trades tied to a weaker dollar, gold's rebound, and rising inflation breakeven rates. According to market reports, the dollar briefly fell below 1.27 against the Singapore dollar, reaching a near one-year low.

**Safe-Haven and Alternative Asset Demand Converge**

Gold benefited from two directions simultaneously: a weaker dollar directly lowered the cost of dollar-denominated gold for holders of other currencies; meanwhile, increased attention on US fiscal policy, debt levels, and long-term Treasury market stability spurred safe-haven flows into gold. Saxo Bank analysts stated that the US Treasury's unexpected expansion of long-term debt buybacks has rekindled market concerns over dollar weakness and pushed investors toward alternative assets. ING strategists also noted that growing market worries about the US fiscal outlook have reignited concerns about currency depreciation, strengthening gold's appeal as a store of value.

**Policy Signals Ahead**

Ricardo Evangelista, senior analyst at ActivTrades, said that whether gold can hold above $4,600 and rise further largely depends on whether the dollar remains under pressure and whether US Treasury yields can stabilize at current levels or even decline further. Market participants are awaiting this week's US PCE price index and Federal Reserve Chair Warsh's speech at the Jackson Hole annual meeting to gauge the future rate path. According to the CME FedWatch tool, as of the relevant data point, traders remained divided on pricing the probability of a Fed rate hike in September.