--- title: "Gold Rises for Third Consecutive Week to Three-Month High as U.S. Treasury Expands Buybacks; \"Currency Devaluation\" Trade Makes a Comeback" type: "News" locale: "en" url: "https://longbridge.com/en/news/296636764.md" description: "The U.S. Treasury unexpectedly increased long-term Treasury buybacks, sharply raising market concerns about the credibility of the U.S. dollar. Even as Treasury yields have risen again, gold prices continue to climb. Analysts point out that the core driver of this gold rally is the weakening U.S. dollar and declining fiscal or monetary credibility in the United States, rather than simply the logic of low yields" datetime: "2026-08-21T18:01:28.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/296636764.md) - [en](https://longbridge.com/en/news/296636764.md) - [zh-HK](https://longbridge.com/zh-HK/news/296636764.md) generator: "portal-rs" --- # Gold Rises for Third Consecutive Week to Three-Month High as U.S. Treasury Expands Buybacks; "Currency Devaluation" Trade Makes a Comeback Gold staged a strong rebound this week, returning to the market spotlight. The U.S. Treasury's unexpected increase in long-term Treasury buyback operations has reignited investor concerns about U.S. fiscal sustainability, pushing gold prices to their highest level in three months and setting the stage for a weekly gain of approximately 5%. On Friday, spot gold rose 1.7% to $4,598 per ounce, its highest level since mid-May this year. The U.S. Treasury announced on Wednesday an unexpected expansion of long-term Treasury buybacks, which suppressed Treasury yields and the U.S. dollar exchange rate, leading to a sustained rise in gold prices. On Thursday, Treasury Secretary Scott Bessent further stated that the government was prepared to expand the scale of buybacks and hinted at special fiscal measures to address borrowing costs at their highest levels in years. **The Treasury's direct intervention in borrowing costs has rekindled market fears that U.S. policies could undermine the credibility of the U.S. dollar, prompting capital to flow into alternative assets—this logic is the core narrative driving gold's 65% cumulative surge in 2025.** The U.S. Dollar Index fell further on Friday, hitting a three-month low. ## Fiscal Intervention Signals Boost Precious Metals In this round of gold price increases, institutional strategists clearly view the Treasury's actions as a key catalyst. Bhanu Baweja, Chief Strategist at UBS Group, stated in an interview that the Treasury's moves are "a very important signal for gold," **with gold poised to be the biggest beneficiary of U.S. efforts to suppress borrowing costs, while "the U.S. dollar will pay the price."** Lowering yields typically supports gold, as the opportunity cost of holding this non-interest-bearing asset declines. However, analysts noted that gold prices continued to rise even after most of the post-buyback announcement gains in 30-year Treasury yields were erased. Charu Chanana, Chief Investment Strategist at Saxo Markets, pointed out: "Interestingly, gold remains strong even though long-end U.S. Treasury yields are still high. **This indicates that this rally is increasingly pointing to a weaker U.S. dollar and declining U.S. fiscal or monetary credibility, rather than simply the logic of low yields."** ## "Currency Devaluation Trade" Makes a Comeback The core narrative supporting gold's long-term bull run in 2025—the "currency devaluation trade"—has once again attracted widespread market attention this week. **This logic posits that high-debt countries such as Japan, France, and the United States generally lack fiscal discipline in the post-pandemic era, relying solely on inflation and currency devaluation to maintain solvency, from which precious metals benefit.** Nicky Shiels, Metal Strategist at MKS Pamp, wrote in a research report released this week: "The currency devaluation trade has returned both as a trading strategy and a thematic narrative. The only way out is currency dilution. Without authorities propping up the market, there would simply not be enough buying power and liquidity at current yield levels." Capital flow data confirms this shift in trend. Previously, gold-backed ETFs—one of the most mainstream tools for retail and institutional investors to gain gold exposure—had seen net outflows for several consecutive months. However, according to Bloomberg tracking data, gold ETF holdings increased by 18 tons in a single day last Thursday, the largest single-day increase since September 2025, and are on track to achieve net inflows for the fifth consecutive week. ## Rally Faces Counterbalance from Rebounding Energy Prices Although gold has risen about 13% this month, the inflation risk brought by the rebound in energy prices may somewhat curb this momentum. **As Trump threatens to severely impact Iran's economy, the prospects for restarting agreements regarding the Strait of Hormuz have dimmed further, causing oil prices to rebound significantly this week. The White House stated that specific details of the relevant plans will be announced next Monday.** Upward pressure on oil prices keeps inflation and interest rate hike expectations on the trading table, which potentially conflicts with the path of gold's continued rise. Before this rebound, gold had experienced a period of sustained correction. New Federal Reserve Chair Walsh emphasized the independence of monetary policy, and the outbreak of war in Iran pushed up interest rate hike expectations, causing gold prices to fall by more than $1,000 per ounce from their early-year highs. ### Related Stocks - [IAU.US](https://longbridge.com/en/quote/IAU.US.md) - [GLDM.US](https://longbridge.com/en/quote/GLDM.US.md) - [USDU.US](https://longbridge.com/en/quote/USDU.US.md) - [UUP.US](https://longbridge.com/en/quote/UUP.US.md) - [GLL.US](https://longbridge.com/en/quote/GLL.US.md) - [SGOL.US](https://longbridge.com/en/quote/SGOL.US.md) - [GLD.US](https://longbridge.com/en/quote/GLD.US.md) - [UGL.US](https://longbridge.com/en/quote/UGL.US.md) - [GLDW.US](https://longbridge.com/en/quote/GLDW.US.md) - [518850.CN](https://longbridge.com/en/quote/518850.CN.md) - [GOLD.AU](https://longbridge.com/en/quote/GOLD.AU.md) - [UBS.US](https://longbridge.com/en/quote/UBS.US.md) ## Related News & Research - [Why is your gold waiting on a speech?](https://longbridge.com/en/news/296733808.md) - [PRECIOUS-Gold retreats as bond yields surge to highest levels in decades](https://longbridge.com/en/news/296241483.md) - [PRECIOUS-Gold holds steady with Fed minutes in focus](https://longbridge.com/en/news/296310600.md) - [PRECIOUS-Gold drops after sharp gains as inflation concerns come to the fore](https://longbridge.com/en/news/296506502.md) - [GRAPHIC-Gold shows early signs of reclaiming safe-haven appeal after Iran war selloff](https://longbridge.com/en/news/296127032.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**