Gold price cooled on Thursday as investors took profits following a sharp rally that pushed the precious metal above US$4,500 ($6,327) an ounce for the first time in nearly three months.
Spot gold fell more than 1% to around US$4,450 an ounce in early trading, before recovering some of its losses. US gold futures, meanwhile, held around US$4,550 an ounce.
Bullion had surged as much as 4% in the previous session, benefiting from sharp declines in the US dollar and long-term bond yields following the Treasury Department’s announcement of an expanded government debt buyback program.
“Gold has come under routine profit-taking pressure following the previous session’s strong gains,” Jim Wyckoff, a market analyst at American Gold Exchange, told Reuters.
Wyckoff says the release of hawkish Federal Reserve meeting minutes and a rebound in oil prices, which revived inflation concerns, also weighed on gold.
Debasement trade returns
The Treasury’s buyback announcement has also renewed discussion around elevated US government borrowing and currency debasement, themes that helped drive gold’s strong performance in 2025.
“The market needs to rotate into another expression of the debasement trade,” Citigroup strategists said in a note cited by Bloomberg.
The bank says Treasury efforts to contain long-term borrowing costs could encourage investors to move back into gold and bets against the US dollar.
Meanwhile, the chances of a Federal Reserve rate hike in September have declined following a series of economic reports that weakened the case for further monetary tightening.
However, minutes from the Fed’s July meeting showed that inflation remains a concern among policymakers. More than three officials supported raising rates at the meeting, while others indicated they could back a hike if inflation fails to improve.
Expectations of higher rates weighed heavily on gold earlier this year, contributing to a decline of more than 20% between March and July.
Bullion has since broken out of that slump after the Fed kept rates unchanged at its latest meeting, with markets increasingly expecting policymakers to do the same in September.
Gold forecasts rise
Gold has gained around 13% so far in August, prompting some major banks to raise or extend their bullish forecasts.
“With our US economists expecting the Fed to remain on hold, we see scope for gold to exceed US$5,000/oz in 2027, potentially earlier,” Morgan Stanley analysts said in a note, while warning that volatility could remain elevated.
The bank expects the Fed to keep rates unchanged for the remainder of this year.
UBS has also extended its gold forecast horizon by one quarter, introducing an end-September 2027 target of US$5,400 an ounce.
Gold miners outperform
The renewed gold rally has also lifted companies across the sector, with gold mining shares significantly outperforming the underlying metal during August.
The VanEck Gold Miners ETF (NYSEARCA:GDX), which tracks major gold producers, has gained at more than three times the rate of gold itself this month. A similar trend has been seen in the VanEck Junior Gold Miners ETF (NYSEARCA:GDXJ), which provides exposure to smaller producers and developers.
The rally is creating a more favourable backdrop for companies across the sector, ranging from early-stage explorers to developers and established producers.
North America remains home to many of the world’s largest gold operations, including Nevada Gold Mines, the joint venture between Barrick Mining (TSX:ABX) and Newmont (NYSE:NEM).
Opportunities beyond Nevada
While Nevada remains the dominant US gold jurisdiction, neighbouring Oregon is also attracting exploration activity.
Provenance Gold (CSE:PAU) has assembled a district-scale project covering around 32km² in the state, where drilling has returned high-grade results as the company works to define its mineralised footprint. The project is also located near Grassy Mountain, which has recently advanced through federal permitting.
Further north, Canada remains one of the world’s leading gold-producing countries, headlined by Agnico Eagle Mines (TSX:AEM) and its operations across the country.
In Québec, ESGold (CSE:ESAU) is advancing its Montauban project with a strategy combining exploration with potential near-term production from existing infrastructure. The project hosts a 1,000-tonne-per-day tailings reprocessing facility, which the company is targeting to bring into production as early as this year.
Down south, Mexico retains its appeal as one of the world’s major precious metals producers. Xali Gold (TSX-V:XGC) holds a district-scale project in the country, with exposure to a historically productive gold-silver belt. The company is also advancing an asset in Peru, where it is evaluating the project’s economic potential.
With gold back above levels last seen in May and major banks raising their longer-term forecasts, the latest rally is once again putting both established gold producers and earlier-stage developers and explorers in focus.
Write to Jackson Chen at Mining.com.au
Image: London Bullion Market Association
