Gold prices climbed to their highest level in three months on Friday, as the US Treasury's decision to buy back government bonds to ease a rise in borrowing costs revived investor concerns about the nation's fiscal health and currency debasement.
Bullion rose to trade at its strongest since mid-May, according to data from the World Gold Council. The move was driven by the Treasury's announcement of a buyback program aimed at stabilizing the bond market, which some analysts interpret as a step toward monetary financing of government debt.
Investors often turn to gold as a hedge against inflation and currency devaluation. The renewed focus on the US fiscal deficit, which has widened due to increased government spending, has bolstered demand for the precious metal.
Market strategists note that while the buyback may provide short-term relief to bond markets, it could undermine confidence in the dollar over the long term. The dollar index fell 0.5% against a basket of currencies on the day, further supporting gold prices.
As of Friday, spot gold was up 2.3% at $2,450 per ounce, marking its biggest weekly gain in three months. Analysts expect continued volatility as investors weigh the implications of the Treasury's actions.
