'Dollar Debasement' Sees Gold Erase Summer Slump at $4500

The PRICE of GOLD held firm Thursday in London, on track to finish the week erasing Summer 2026's previous $500 plunge as US bond yields began climbing again as analysts called yesterday's big buyback announcement from the Treasury Department just another new step on the road of Dollar debasement.

New York's stock market fell back, reversing Wednesday's small 0.3% rally in the S&P500, as gold extended yesterday's $160 leap to trade $35 above $4500 per troy ounce.

The price of gold in China earlier jumped 2.8% for the day to ¥970 per gram at the Shanghai Gold Exchange, setting the highest since 5 June on the heaviest volume in the key Au(T+D) contract since the last day of May.

But that price jump lagged the Dollar-price jump in London bullion, which traded 3.5% higher day-on-day at the time of Thursday's SGE benchmark auction, trading at the highest since 2 June around that $4500 level.

Together, that put the official wholesale price in gold's No.1 consumer nation at a discount to London quotes of nearly $9 per ounce, the steepest disincentive for new imports into China since early April.

With the US government's long-term borrowing costs this week hitting the highest in 2 decades as federal debt tops $40 trillion, the Treasury on Wednesday said it's doubling the size of bond buybacks between next month and November.

Aimed at easing upwards pressure on Washington's long-term borrowing costs, "Yesterday's announcement is a form of financial engineering that papers over mounting stress in the Treasury market," says former FX economist and now Brookings Institution think-tank fellow Robin Brooks, warning that "Dollar debasement has begun [and the] buyback announcement risks sending the Dollar into a devaluation spiral."

The US Dollar today hit its lowest FX value since mid-May on its trade-weighted DXY index, down 3.2% from mid-June's 13-month high.

But that still left the price of gold in UK Pounds and also Euros back where it stood as the northern hemisphere summer began in the first week of June, trading above £3300 and €3850 per troy ounce respectively.

Priced in the Dollar, silver today ticked its highest spot-market price in 9 weeks at $67.50 per troy ounce, gaining 4.5% from last week-end.

Cryptocurrency Bitcoin meanwhile joined gold in erasing the last of this summer's previous drop, trading back above $71,600.

But while the largest crypto currency remains 18.7% lower for 2026 to date, the price of gold today traded 4.1% higher from New Year's Eve.

Silver has lost 6.2% over that period, while the US Treasury's 4.5% coupon bond maturing in 10 years' time has dropped 4.7% in price. Copper has meanwhile risen 12.7%, the tech-heavy Nasdaq 100 index of US stocks 16.0%, and crude oil 55.8%.

July saw China's gold imports edge back to 134.5 tonnes, down by 10 tonnes from the previous 6-month average, which had marked a near-90% jump by weight from the first half of 2025 even as gold priced in Yuan as well as in Dollars, Euros, Sterling and all other currencies averaging a fresh half-year record this January to June.

With Fed chair Kevin Warsh set to speak at next week's annual central bank conference in Jackson Hole, betting on next month's Fed decision today put the odds of 'no change' to rates at 2-in-3, the highest since mid-June.

"Expect sharp relief rallies in debasement assets into the Sept FOMC" meeting of US central bank the Federal Reserve, says precious metals strategist Nicky Shiels at Swiss bullion refiners and finance group MKS Pamp.