Gold Price Surge: Gold prices have reached their highest level in three months due to the intervention of the US Treasury. Spot gold in New York was up 2.2% at $4,614.63 an ounce, according to Bloomberg. Silver rose 2% to $69.46 an ounce. The reason for this huge rise in gold prices is the bold step taken by the US Treasury Department, in which it suddenly increased the buyback of long-term government bonds to curb rising borrowing costs.

This announcement rekindled old fears among investors about the US financial burden. On Friday, gold was trading at its highest price since mid-May and is set to end the week with a gain of about 5%.

(Also read: Will the price of gold fall below ₹ 1.30 lakh or go beyond ₹ 2 lakh?)

Gold gets boost due to fall in bond yield and dollar

The move sent both government bond yields and the dollar falling. This has raised concerns among investors that US policy could weaken confidence in the dollar. This is the theme that helped gold gain a spectacular 65% in 2025. Gold will be the biggest beneficiary of this effort to suppress US borrowing costs, while the dollar will have to pay its price.

This is a big change in the attitude of investors towards gold. Gold remained mostly down from its record high at the beginning of the year. At present, gold is still about $ 100 an ounce below its peak in late January.

New stance of US Treasury Secretary

Let us tell you that on Friday the dollar index fell to its lowest level in three months, whereas at the beginning of this week it had fallen heavily. Treasury Secretary Scott Besant went further on Thursday, saying he was prepared to increase buybacks of expensive debt, and that the administration would soon introduce a fiscal initiative to deal with rising borrowing costs.

What is the mathematics of 'debasement trade'?

The biggest story behind the gold boom in 2025 was the 'debasement trade'. According to this thinking, debt-ridden countries like Japan, France and the US appeared unwilling to adopt fiscal discipline after Covid-19, and their only path to solvency seemed to be inflation and weak currencies, which benefit precious metals.

Heavy buying in Gold ETF and risk of crude oil

There were continuous withdrawals in gold-linked exchange-traded funds (ETFs) for the last few months, but now this trend has completely changed. Funds tracked by Bloomberg bought 18 tonnes of gold on Thursday, the biggest single-day purchases since September 2025, and investments are likely to rise for the fifth consecutive week. However, gold's nearly 14% rally this month may be slowed by rising energy prices, as higher oil prices keep inflation risks and the possibility of interest rate hikes open.