Gold prices have strengthened despite higher U.S. Treasury yields, supported by a weakening dollar and persistent inflation pressures. The Personal Consumption Expenditure Price Index rose 3.7% year-over-year in July, while core PCE increased 3.3%, both well above the Federal Reserve’s 2% target. Derivatives markets now assign a 40% probability to a September rate hike, down from earlier expectations of two hikes, as economic data disappoints.
The dollar’s inability to sustain gains amid Treasury efforts to control bond yields has fueled a shift toward alternative assets. Over the past five days, gold- and Bitcoin-focused ETFs attracted roughly $7 billion in inflows, with nearly half directed to State Street Investment Management’s gold-backed product. The analysis highlights a ‘debasement trade,’ where investors reduce exposure to currencies and bonds in favor of precious metals and cryptocurrencies amid concerns over U.S. policy credibility.
Natixis has raised its gold price forecast for the end of 2026 from $4,600 to $5,000 per ounce, citing early signs of the metal’s rally even before the Treasury’s announcement on long-term bond purchases. The firm attributes the upward momentum to a series of weak U.S. economic reports that reshaped futures market expectations. TD Securities notes that precious metals are stabilizing in higher trading ranges but cautions against overestimating the potential for record highs, pointing to recent price pullbacks ahead of key speeches at the Jackson Hole symposium.
