Gold reaches highest price in three months as dollar weakens
Silver has also climbed to its strongest level in two months amid renewed market interest. Gold futures rose about 2% to $4,661.70 on Friday, reaching their highest level since around mid-May. Silver also gained about 2% to $70.08, crossing the $70 mark for the first time since mid-June.
Precious metals rebound
Both gold and silver are ending the week around 5% higher. The strong performance comes after a mostly quiet summer when precious metals remained within relatively narrow price ranges.
Ole S. Hansen of Saxo Bank said the weaker US dollar was one of the main factors supporting commodity prices. The dollar index was near a three-month low despite falling only slightly during Friday’s trading.
Treasury move adds support
UBS Group AG chief strategist Bhanu Baweja said the rise in precious metals was also linked to a Treasury Department decision to increase buybacks of longer-term government debt. He described the move as “a very important signal for gold.”
Gold and silver had earlier fallen from record levels reached at the start of the year. Gold spent much of the summer around $4,000 to $4,200, while silver generally traded between $50 and $60.
Fed rate outlook remains important
Gold lost about 16% during the quarter ending June 30, marking its weakest quarterly performance in more than a decade. Analysts linked the summer weakness to a stronger dollar and expectations about possible changes in US interest rates.
The metals have recovered strongly in August, with gold recording its best weekly performance in seven months earlier this month. However, the future direction of prices could depend heavily on Federal Reserve policy.
Rate decision could shape prices
There is still a possibility that the Federal Reserve could raise interest rates later this year. Higher interest rates usually put pressure on gold and silver because they can make interest-bearing assets more attractive.
The CME Group’s FedWatch tool puts the probability of a December rate hike at about 70.9%. The likelihood of a rate increase at the September or October meetings is considerably lower.
Why prices remain volatile
Gold and silver reached record highs earlier this year, with gold approaching $5,600 and silver reaching about $121 in late January. International tensions, US tariffs, interest-rate changes and rising demand from technology industries helped support the rally.
Prices later declined after President Donald Trump selected Kevin Warsh to lead the Federal Reserve, as markets viewed him as less likely to support rate cuts. Precious metals also faced pressure during the Iran conflict as oil prices surged and metals generally moved in the opposite direction.
Gold’s latest rise shows that investor interest in precious metals is returning after a slow summer. The weaker dollar and Treasury policy have given prices another boost.
However, interest-rate decisions remain a major risk for the market. If borrowing costs rise, gold and silver could again face pressure despite the recent rally.
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