Gold continued its rally on Friday, breaking above US$4,600 ($6,410) an ounce for the first time since mid-May as a weaker US dollar and renewed investor demand lifted the precious metal.
Spot gold surged another 2% to above US$4,600 an ounce, placing the yellow metal on track for a third consecutive weekly gain.
Gold has now risen around 13% over the past month as concerns over high interest rates ease following softer US economic data and renewed hopes of a ceasefire in the Middle East.
“Gold call option demand has risen sharply amid renewed demand for global macro-policy hedges, creating a mechanical price amplifier to both the upside and downside,” Goldman Sachs said in a note.
The bank also says fading conviction around US rate hikes following the Federal Reserve’s July pause and softer economic data has revived speculative interest in Comex gold and demand for rate-sensitive gold exchange-traded funds (ETFs).
Sentiment rebounds
Gold received another boost this week after the US Treasury announced plans to increase buybacks of long-dated government debt, helping push the dollar and bond yields lower.
The Treasury’s move “is a very important signal for gold”, UBS Group chief strategist Bhanu Baweja told Bloomberg.
Bullion could be the main beneficiary of US efforts to contain borrowing costs, he says, while “the dollar will pay the price”.
It marks a sharp reversal in sentiment for gold, which had mostly trended lower from its record highs at the start of the year.
The appointment of Federal Reserve Chair Kevin Warsh and inflation concerns stemming from the US-Iran war had raised expectations of higher interest rates, weighing heavily on the precious metal, which yields no interest.
However, the chances of the Fed raising interest rates have reduced significantly in recent weeks, lifting gold’s appeal. The Treasury’s bold intervention on Wednesday gave the metal another jolt.
Treasury Secretary Scott Bessent later went further, stating that the government was prepared to further expand buybacks of higher-cost debt and flagged an upcoming fiscal initiative aimed at addressing elevated borrowing costs.
Interestingly, gold has continued to climb even as 30-year Treasury yields erased much of their initial decline following the buyback announcement.
“That suggests the rally is increasingly about dollar weakness and US fiscal or monetary credibility, rather than simply a lower-yields story,” Saxo Markets chief investment strategist Charu Chanana told Bloomberg.
The dollar index extended its decline to a three-month low on Friday after falling sharply earlier in the week.
Gold remains around US$1,000 below its late-January peak, but its recent recovery has taken its year-to-date gain to approximately 4%, following a rise of more than 60% in 2025.
‘Debasement trade’ returns
One of the major narratives behind gold’s 2025 rally was the so-called ‘debasement trade’.
The thesis centres on concerns that heavily indebted governments could rely on inflation and weaker currencies to manage growing debt burdens, increasing the appeal of hard assets such as precious metals.
“The debasement trade is back as both a trade and a theme,” MKS PAMP metals strategist Nicky Shiels said in a note this week.
Investor flows are also showing signs of a significant turnaround.
Gold-backed ETFs had experienced months of steady outflows following the outbreak of the Middle East war, but that trend has now reversed.
Funds tracked by Bloomberg added 18 tonnes of gold on Thursday, their largest one-day increase since September 2025, putting holdings on course for a fifth consecutive week of inflows.
Commodity bull cycle
Gold is not the only metal rallying.
Silver has gained around 20% over the past month, outperforming gold, while base metals including copper and zinc have also surged. Copper is trading near record levels, while zinc just reached a four-year high.
The broad-based gains have helped revive bullish sentiment across commodities.
Former Goldman Sachs commodities chief Jeff Currie believes the commodity bull cycle has entered its next phase, driven by a combination of tight physical markets, currency debasement, and government intervention.
“Wake up, folks. Commodities are telling you something, and yesterday the Treasury confirmed it,” Currie wrote on X.
“Scarcity in the physical world. Repression in the financial one. Scarcity pushes prices up. Repression holds yields down. The gap between them is the debasement. Commodities are the only asset class that wins on both sides.”
Gold stocks in spotlight
Gold equities have been among the biggest beneficiaries of the improved sentiment, significantly outperforming the underlying metal this month.
The VanEck Gold Miners ETF (NYSEARCA:GDX), which tracks major gold producers, has risen at more than three times the rate of gold during August.
The VanEck Junior Gold Miners ETF (NYSEARCA:GDXJ), which provides exposure to smaller producers and developers, has shown similar outperformance.
The stronger backdrop is putting renewed attention on junior explorers as summer exploration programs gather pace across the Americas.
Hi-View Resources (CSE:GXLD) is exploring in British Columbia’s prolific Toodoggone Mining District, where it holds several projects covering nearly 28,000 hectares. The company is currently working towards identifying drill targets.
In Ontario, Canuc Resources (TSX-V:CDA) has completed drilling at its flagship East Sudbury Project and is conducting geophysical work to evaluate its deeper discovery potential.
Signature Resources (TSX-V:SGU), meanwhile, has received all results from its latest drilling campaign at the Lingman Lake Project in northwestern Ontario, with the company now moving into surface exploration work.
Further afield, Stockworks Gold (TSX-V:STW) is strictly focused on a greenfield gold project in Brazil, while Tajiri Resources (TSX-V:TAJ) is advancing exploration in the Guiana Shield. The latter is progressing towards its maiden drilling program at the Yono Project, located within a region recognised for significant gold potential.
With gold back above US$4,600 and investment flows returning to the sector, the latest rally is putting both the precious metal and the companies searching for its next major deposits firmly back in focus.
Write to Jackson Chen at Mining.com.au
Image: The Royal Canadian Mint
