Gold extends rally above $4,600 as dollar weakness and debt fears fuel demand

Gold extended its rally on Monday, holding above $4,600 per ounce and reaching levels not seen since mid-May, as persistent U.S. dollar weakness and renewed safe-haven demand fueled buying in the precious metal. The advance builds on a nearly 5% weekly gain last week, marking gold's third consecutive week of increases.reuters+1

Treasury Buybacks Weigh on the Dollar

The catalyst for gold's latest surge traces back to the U.S. Treasury's announcement last Wednesday that it would "at least double" the maximum size of its longer-dated debt buyback operations from $2 billion to at least $4 billion per operation, effective September 9 through November 4. Treasury Secretary Scott Bessent told CNBC the following day that the accelerated buyback could exceed even the $4 billion figure.cnbc+1

The move, intended to provide liquidity support in the longer-dated bond market, sent yields sharply lower and dragged the dollar to multi-month lows. A weaker dollar makes gold cheaper for overseas investors, drawing capital into the precious metals market. Market participants have also grown increasingly uneasy about the scale of U.S. government debt and its long-term implications for the dollar's purchasing power.cnbc+1

Technical Momentum and Key Levels

On Friday, spot gold climbed 2.4% to $4,623.94 per ounce, earlier touching $4,631.99 — its highest since May 15, according to Reuters ↘ 0.07%. The metal broke above its 200-day moving average near $4,513, a level technicians view as confirming bullish momentum. Analysts at FXStreet and TradingKey note upside targets at $4,773 and the $4,890 resistance zone, though the RSI indicator has surpassed the 70 reading, suggesting overbought conditions that could precede a correction.tradingkey+2

All Eyes on PCE Data and Jackson Hole

Attention now turns to Wednesday's release of July PCE inflation data and Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole Economic Symposium on Friday, August 28. A cooler-than-expected PCE reading could reinforce expectations that the Fed will hold off on further rate hikes, adding fuel to gold's rally. Warsh's address — his first at Jackson Hole as Fed Chair — will be scrutinized for signals on how he balances slowing employment against above-target inflation.fxstreet+1