Gold rises more than 5% in a week as debt fears and a weaker dollar lift prices

Gold rose on Friday and finished the week up more than 5%, moving close to a three-month high as swings in the U.S. Treasury market, a softer dollar and rising concern over the size of America’s debt helped support the metal. Spot gold climbed from above $4,000 at the start of the month to $4,602, putting the one-month gain at 11.73% and the weekly move at 5.27%. The market has also seen a fresh wave of devaluation trades, adding to demand for the metal. The U.S. Treasury recently said it would expand its liquidity-support buybacks for 10- to 30-year government bonds by at least a factor of two, with the aim of easing selling pressure in long-dated Treasuries. That move pushed long-term yields lower and weighed on the dollar, giving precious metals direct support. At the same time, total U.S. federal debt broke through the $40 trillion mark for the first time. Market participants have increasingly treated debt cost and duration as structural variables for monetary policy, a shift that has kept interest in gold as a hedge elevated. UBS commodity analyst Giovanni Staunovo said gold could gradually recover to $5,400 an ounce over the next 12 months, which would match the record high set in early January, supported by rising global debt levels and a structurally weaker dollar. Bridgewater Associates founder Ray Dalio also said investors should hold 10% to 15% of their assets in gold to reduce the risk of a debt crisis. World Gold Council survey data showed that 89% of the institutions polled expect central-bank gold reserves to rise over the next year. Global annual gold demand is now near 5,000 metric tons, close to a record, while supply is growing at only about 1.5% a year. Market watchers also pointed to near-term risks. Tensions in the Middle East have pushed up energy prices, which could add to inflation pressure and make major central banks more cautious on rate cuts, supporting Treasury yields in the process. Because gold does not pay yield, higher yields can weigh on the metal. Analysts said gold has already rebounded more than 10% from recent lows and may need to digest profit-taking in the short term. If it can hold support around $4,400 an ounce, the broader bullish structure should remain intact.