Gold futures pushed above $4,620 an ounce on Monday, extending a third straight weekly advance as the U.S. Treasury's surprise ramp-up of long-bond buybacks weighs on the dollar. The metal is now retesting levels last seen in May, forming a double top that could give way once Treasury Secretary Scott Bessent addresses sanctions and fiscal policy later Monday.
The metal climbed more than 5% last week, its third consecutive weekly gain. It also briefly traded above $4,620 an ounce on Monday, building on Friday's 1.9% gain and holding near its highest level in three months.
Treasury buybacks pressure the dollar
The latest leg higher is tied to the U.S. Treasury's surprise decision to ramp up purchases of longer-dated government debt, which pushed bond yields and the dollar lower. As a result, investors have leaned further into hard assets such as gold as confidence in the dollar's long-term purchasing power erodes.
Bessent has since indicated the buyback program could expand further and said the administration would soon unveil a fiscal initiative aimed at the high cost of government borrowing. Gold's move above $4,500 was supported by expectations that the government will keep trying to hold down longer-term yields, while pressure on the dollar encouraged investors to add bullion exposure.
The backdrop has grown starker: U.S. government debt crossed $40 trillion for the first time. The dollar, meanwhile, has fallen to its lowest level in more than three months.
Middle East conflict keeps demand elevated
The U.S.-Iran conflict has now reached its 178th day, with Yemen's Iran-backed Houthis declaring a naval blockade against Saudi Arabia and attacking vessels in the Red Sea, disrupting Middle East oil supplies. Iran has called on the U.S. to lift its own naval blockade before further negotiations, and the prior peace deal lapsed earlier in August with neither side moving to renew it. Even so, oil prices fell more than 1% on Monday after Iranian media reported the country had allowed some Iraqi oil tankers to pass through the Strait of Hormuz.
Chart tests a double top
Gold has moved above its 200-day moving average around $4,513, a level traders often watch as a sign a longer-term trend has turned positive. The next major technical target is near $4,700 if momentum continues.
On Monday's daily chart, gold futures opened at $4,681.44, tested a high of $4,738.21 and a low of $4,652.40. The contract was trading at $4,735, retesting the levels touched on May 14 and forming a double top.
Gold has also moved well beyond the $4,000-an-ounce level that held as support during the earlier correction, with central-bank purchases and renewed ETF demand reinforcing the recovery. Bessent is scheduled to address sanctions at a conference starting at 14:00 ET (18:00 GMT) on Monday, an event that could trigger a steep slide if the double top holds.
Source: Commodities Analysis & Opinion
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