Gold futures buying hits decade high amid US debt fears

Speculative investors have poured into gold futures at the fastest pace in more than a decade, driven by mounting concerns over U.S. government debt sustainability and a surprise Treasury buyback announcement that jolted markets last week.

Net purchases of gold futures totaled $22.2 billion over the three weeks ending August 18, according to Goldman Sachs's The Goldman Sachs Group, Inc. ↘ 0.36% commodities trading desk, citing Commodity Futures Trading Commission data — the highest nominal amount in over ten years. Net long positions reached the 93rd percentile within their two-year historical range, with CFTC figures showing non-commercial net-long contracts climbing to 222,200 as of the most recent reporting period.moomoo+1

Treasury Buyback Sparks Fresh Surge

The rally intensified after the U.S. Department of the Treasury announced an expansion of its buyback program for long-dated government bonds. Gold rose nearly 6% in the week of August 18-21, with spot prices breaking above $4,500 per ounce for the first time. By Monday, August 24, spot gold had climbed to its highest level since mid-May, according to CNBC.cnbc+1

Jonathan Garber of UBS Group's ↘ 2.03% trading desk wrote that some market participants interpreted the Treasury's move as "an attempt to influence long-end pricing and curve dynamics," sparking concerns about confidence in the U.S. dollar. Open interest in gold rose for several consecutive trading days, accumulating an increase of $8.9 billion during the period.moomoo

Broad-Based Buying, But Risks Loom

The buying wave was not driven by a single class of investor. Managed money accounted for $10.9 billion of the three-week total, with "other categories" adding $8.5 billion and non-reportable positions contributing $2.8 billion. The call-versus-put open interest gap on the SPDR Gold Shares ↘ 0.79% ETF reached approximately 2.4 million contracts, its widest since February.captainaltcoin+1

Goldman Sachs maintains "significant upside risks" to its year-end gold price target of $4,900 per ounce, while prediction markets now place more than 60% probability on gold reaching $5,000 within the year, up from 40% a week earlier.moomoo+1

Jackson Hole Looms as Key Variable

The Jackson Hole Economic Policy Symposium, scheduled for August 27-29, has emerged as the most immediate catalyst. Goldman Sachs trader Robert Quinn warned that if Federal Reserve Chair Kevin Warsh signals a hawkish stance on inflation during his appearance, it could trigger rapid position unwinding given the stretched bullish sentiment. UBS Group expects gold to consolidate near current levels rather than extend immediately higher.kansascityfed+2