Topline

The price of gold hit its highest level since early June on Wednesday, breaking out of what has been a largely stagnant summer for the precious metal, with analysts crediting the price increase to the Treasury Department's liquidity support announcement and a weakening dollar.

Key Facts

The price of gold reached a high of $4,557.60 on Friday, up more than 3% to hit its highest level since June 4.

Some analysts have credited the rally in gold’s price to the Treasury Department’s announcement early Wednesday that it would double the size of its liquidity support buyback operations for 10-to-30 year securities.

In a note cited by Reuters, TD Securities said the Treasury’s announcement gave metals a “jolt of life,” saying gold investment could “quickly return amid Treasury liquidity support, a Fed willing to look through an energy shock, and a growing stagflation narrative, which should all ultimately see lower real rates.”

Ole S. Hansen, head of commodity strategy at Saxo Bank, also attributed the rise in gold’s price to the weakening dollar in a post on X Wednesday morning, as the U.S. dollar index is down about 0.7% as of Wednesday afternoon.

“The combination of lower yields and a weaker dollar providing fresh tailwind, reinforcing the recovery seen since early August,” Hansen wrote.

How Has Gold Fared This Summer?

Gold prices are on an upswing lately after the price remained largely stagnant for most of the summer. Earlier this month, gold posted its best week in seven months, rising about 7% in price, largely thanks to a weaker dollar, declining Treasury yields and an unexpected slump in employment data. But before the August surge, gold was mostly bound between $4,000 and $4,200 for much of the summer as it came off its worst quarter in more than a decade. For the three months ending June 30, gold shed about 16% of its value, its worst percent decline since 2013. By that time, gold and silver had both fallen to about seven-month lows, with gold falling below $4,000. At the time, analysts blamed a stronger dollar, which was then at its highest level in more than a year, and expectations that the Federal Reserve may raise rates at some point this year.

tangent

Silver also saw a moderate price increase on Wednesday, rising about 3% to an intraday high of $66.16. Unlike gold, silver is not at a two-month high. Silver reached higher prices of about $67 last week, and its price had previously risen past $70 in mid-June.

Will The Federal Reserve Raise Rates This Year?

It is possible the Federal Reserve could raise interest rates later this year. CME Group’s FedWatch tool says the probability of a rate hike at the Fed’s December meeting is about 69.2%, while the likelihood of an earlier rate hike is much lower (36.6% for September and 49.2% for October). Higher interest rates are generally associated with decreasing metals prices, meaning an interest rate hike could potentially cause the prices of gold and silver to fall.

key background

Gold and silver have come down from the all-time highs they hit earlier this year. In January, the metals capped a months-long, historic price rally as gold topped out around $5,600 while silver reached a record $121. Silver has since shed nearly half that value. Both metals have generally declined throughout the Iran war, as they have traded inversely with oil prices, which spiked during the conflict. Prior to losing much of their value, gold and silver rose so dramatically because of factors including interest rate cuts, President Donald Trump’s tariffs, international tensions and increasing demand for metals from technological industries.