Gold surged past $4,600 per ounce on Friday, touching its highest level in three months and putting the metal on track for a nearly 5% weekly gain.

A weaker dollar and fresh debt concerns are driving investors toward safety.

What is Driving the Gold Rally?

Spot gold traded between $4,580 and $4,600 on Friday, while futures approached $4,650, according to TradingView data. The rally stems from two converging forces:

• A weaker US dollar, renewed concern over soaring American debt, and the Treasury’s decision this week to double long-term bond buybacks all pushed investors toward non-yielding assets.
• That buyback move aimed to stabilize the bond market after the 30-year Treasury yield hit its highest level since 2007. The announcement initially pushed yields lower and further weakened the dollar, adding fuel to gold’s advance.

Prominent market voices highlighted the significance of the move. Economist Mohamed El-Erian noted that gold ranked among the morning’s standout performers, topping $4,600 alongside Bitcoin’s rebound above $79,000.

Longtime gold advocate Peter Schiff pointed to the precious metal’s rally as evidence that the Federal Reserve has lost credibility on its inflation target.

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Sentiment among professional investors has also shifted markedly. Bank of America’s latest Global Fund Manager Survey showed a net 16% of managers now view gold as undervalued, the highest reading since March 2023 and up sharply from just 6% in July.

Structural support also remains strong. Central banks continued aggressive buying, with second-quarter purchases hitting a quarterly record.

US federal debt recently surpassed $40 trillion, amplifying fiscal concerns that favor gold as a hedge against currency debasement.

Rising Treasury yields typically signal investor concern about long-term debt sustainability, and gold tends to benefit when both yields and the dollar soften.

Where Does the Gold Rally Go From Here?

Analysts remain genuinely divided on gold’s next move. Some see the breakout above the 200-day moving average as confirmation of renewed bullish momentum, with potential targets toward $5,000 if dollar weakness persists.

Others caution that higher oil prices and sticky inflation could reinstate pressure on yields, limiting further gains in the near term.

“…Gold continues its strong run higher, gaining 1.8% on the day and 5.1% on the week to trade at USD 4,600, well above the 200-day MA which was the technical trigger for fresh momentum buying and now also above the 0.382 Fibonacci retracement of the January to June correction at USD 4,574. Next level being the 0.5 retracement and May local high around USD 4,770…,” analyst Ole S Hansen said on X.

Silver’s parallel move near $70 reinforces the broader precious metals narrative. Investors appear to be rotating toward tangible assets as confidence in traditional monetary tools shows visible signs of strain.

For now, gold’s return above $4,600 underscores its role as a preferred safe haven amid fiscal uncertainty and shifting monetary expectations across global markets.

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Source: BeInCrypto