Gold Hits Three-Month High as Dollar Weakens

Gold and silver prices surged Friday as precious metals rebounded from a largely subdued summer, with gold reaching its highest level in about three months and silver climbing to a two-month high. Analysts attributed the gains in part to a weaker U.S. dollar and the Treasury Department’s plans to increase buybacks of longer-dated government debt.

Gold futures climbed roughly 2% to $4,661.70, their highest level since around mid-May. Silver also gained about 2%, reaching $70.08 and moving above the $70 mark for the first time since approximately mid-June.

Both metals were on track to finish the week about 5% higher, extending a recovery that began after prices remained relatively range-bound for much of the summer. Gold had generally traded between $4,000 and $4,200, while silver stayed around $50 to $60 during much of the period.

Ole S. Hansen, an analyst at Saxo Bank, said Friday that the softer dollar was among the main factors supporting commodity prices. The dollar index was down only about 0.02% in morning trading but remained near a three-month low.

UBS Group AG chief strategist Bhanu Baweja also pointed to the Treasury Department’s decision to double buybacks of government securities with maturities of 10 to 30 years. Baweja described the move as “a very important signal for gold.”

The recent rally follows a difficult second quarter for gold. For the three months ending June 30, gold lost 16% of its value, its weakest quarterly performance in more than a decade. Gold and silver subsequently fell to seven-month lows, giving back some of the gains accumulated during a historic rally that peaked in January.

Analysts had linked the summer weakness to several factors, including a stronger dollar and expectations that the Federal Reserve could raise interest rates later in the year. Higher interest rates generally weigh on gold and silver prices. The metals have since regained momentum in August, with gold posting its strongest week in seven months earlier this month.

The possibility of another Federal Reserve rate increase remains a factor for precious metals markets. CME Group’s FedWatch tool puts the probability of a hike at the Fed’s December meeting at about 70.9%, considerably higher than the chances of an increase at the September or October meetings.

Gold and silver reached record levels earlier this year. Gold climbed to roughly $5,600, while silver approached $121 in late January. The rally was supported by international tensions, President Donald Trump’s tariffs, interest-rate cuts and rising demand for metals from technology-related industries.

Prices retreated in January after Trump selected Kevin Warsh as his choice to lead the Federal Reserve, as Warsh was considered less likely to support rate cuts. Precious metals also generally declined during the Iran war, when gold and silver moved inversely to oil prices as crude prices surged.