Key Takeaways:
Gold rose more than 4 percent to top $4,500 per troy ounce Wednesday, the sharpest daily gain in six and a half months, on US debt worries.
"The US Treasury's announcement was seen as a sign of stress," Carsten Fritsch, commodities analyst at Commerzbank, said. "The sharp rise in US bond yields was not due to a change in Fed interest rate expectations, but rather to long-term inflation risks and growing concerns about debt levels."
The rally followed the Treasury's plan to more than double buybacks of long-term government bonds with maturities of 10 to 30 years, a move that calmed the bond market and pushed yields lower while the dollar depreciated significantly. US public debt broke through $40 trillion this week, barely four and a half years after crossing $30 trillion. Interest payments are expected to reach $1.1 trillion this fiscal year, a threefold increase within five years, according to Treasury data.
Gold extended gains Friday, testing three-month highs near $4,600 per ounce as the dollar weakened further. Holdings in gold ETFs tracked by Bloomberg recorded their strongest daily increase since September 2025 at 18 tons, according to Commerzbank.
US Debt Crosses $40 Trillion
The $40 trillion debt milestone marks a rapid acceleration in federal borrowing. The Congressional Budget Office projects debt held by the public could reach 106 percent of GDP by 2034, up from 97 percent in 2023. These projections have fueled concerns about long-term fiscal sustainability, potential inflation, and currency depreciation — factors that historically support gold as a store of value.
Spot gold last traded above $4,600 in early June, and the metal remains well above its 52-week average as central bank buying and retail demand continue to provide structural support. Silver has followed gold higher this week, though it has lagged the yellow metal's gains. The broader precious metals complex has benefited from the same safe-haven flows, with platinum and palladium also trading firmer.
Investors will monitor upcoming US economic data and Federal Reserve policy signals, as these could influence both the dollar and real yields — the primary drivers of gold prices. The next event to watch is the August US PMI release, scheduled for Friday, which could provide direction on economic momentum and inflation expectations. A stronger-than-expected reading could pressure gold by supporting the dollar, while a weak print would likely reinforce the safe-haven bid. The Fed's September meeting remains the next major policy decision point.
This article is for informational purposes only and does not constitute investment advice.
