Gold climbed to a three-month high Tuesday, extending its August rally as a weaker dollar and falling Treasury yields boosted demand for the precious metal. Spot gold reached $4,696.18 an ounce, its highest level since May 14, before pulling back, while Bitcoin rallied above $80,000 for the first time since mid-May, reaching $81,237.
The rallies came as the dollar and long-term Treasury yields fell following the Treasury Department’s expansion of bond buybacks last week. Gold jumped 3% after the announcement, according to a recent report by the World Gold Council.
Demand for gold investment products had already started to recover. Global gold-backed exchange-traded funds recorded $3 billion in net inflows in July, reversing two consecutive months of outflows, the World Gold Council reported, with holdings increasing by 23 metric tons to 4,068 tons.
“Markets have largely priced out a September Fed hike as softer data, albeit influenced by seasonality and World Cup-related distortions, have eased concerns about further tightening,” the World Gold Council wrote. The Council added that a reversal in Commodity Trading Advisor positioning could reinforce downward pressure on yields and support gold’s recovery.
The World Gold Council said investors returned to gold as prices recovered in July, ending a four-month losing streak with a roughly 2% gain. European funds led with $2 billion in inflows, followed by $616 million in Asia and $71 million in North America.
Gold and Bitcoin have both benefited from the weaker dollar, though investors buy the assets for different reasons. “BTC and gold rising together while the dollar weakens is consistent with debasement and fiscal-credibility concerns, i.e., the classic ‘hard asset’ hedge trade,” Jake Kennis, senior research analyst at Nansen, told Decrypt.
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