Gold prices climbed to a three-month high on Tuesday as U.S. Treasury plans to expand buybacks of longer-dated government debt fueled demand for the precious metal amid concerns over fiscal policy and inflation.
Spot gold was last trading 0.4% lower at $4,634.20 an ounce by 05:41 ET, following an earlier gain that pushed it to its highest level since late May. Gold futures fell 0.2% to $4,691.14 per ounce. The metal has rebounded from a late-June low near $3,942, reflecting renewed investor interest in non-yielding assets.
The Treasury’s announcement that it would at least double buybacks of longer-dated debt revived concerns about the dollar’s purchasing power and the sustainability of U.S. fiscal policy. Lower bond yields and a weaker dollar typically increase gold’s appeal as a hedge against inflation and currency devaluation. Treasury Secretary Scott Bessent indicated the administration is preparing a broader fiscal initiative to address elevated borrowing costs, though no new details were provided.
Geopolitical tensions and trade disputes added further support to gold’s rally. The White House threatened economic penalties for countries continuing to engage with Iran, while a breakdown in U.S.-Canada trade negotiations led Washington to impose 50% tariffs on some Canadian goods. Additional 50% tariffs on Canadian cars, trucks, and auto parts are set to take effect in January 2027, escalating trade frictions.
Analysts noted that gold’s recent advance confirms a base formation near the late-June low, with earlier August gains driven by optimism over a potential Middle East diplomatic breakthrough that could ease oil price pressures and reduce central bank rate-hike expectations. Federal Reserve Chair Kevin Warsh is scheduled to speak at the annual Jackson Hole symposium on Friday, with U.S. inflation data due on Wednesday, both of which could influence gold’s near-term trajectory.
