Gold revives its shine

A rough patch for US Treasurys has a silver lining: It might kick off a golden era for gold.

Today, gold rose 2.36%, capping off an extended winning streak this week and reversing bullion’s slump in Q2, which was its worst quarter since 2013.

Gold vs the greenback

Gold’s recent bump isn’t due to surging demand for rings this wedding season. The debasement trade is making a comeback—aka, traders are betting that the US dollar will get weaker. The dollar losing value is a boon for gold because the commodity is priced in US dollars, which means it makes gold cheaper for investors buying with other currencies, boosting global demand for the metal.

Plus, in an effort to stymie the bond selloff carnage, Treasury Secretary Scott Bessent announced that the US Treasury would double its buyback program for bonds that have durations between 10 and 30 years. This essentially boosted the price of Treasurys, creating a ceiling for just how much higher yields could rise. Yields fell lower and the dollar weakened, kicking off a resurgence of demand for gold.

Bullion’s bull run

Analysts forecast a rocky road ahead for the metal, but are confident it will continue to climb out of its Q2 rut.

UBS maintained its forecast that gold will hit $4,600 per ounce by the end of this year, but raised its forecast for year-end 2027 to $5,400 per ounce—$200 per ounce higher than the strategists predicted back in June. Spot bullion is currently trading around $4,679.

“This higher forecast reflects our view that disinflation could become a more prominent market theme next year,” wrote UBS analyst Giovanni Staunovo. “Our revised projections at the longer end of the forecast horizon also suggest that pullbacks should be viewed as buying opportunities.”

UBS isn’t the only bullion bull on Wall Street. Morgan Stanley released a new gold forecast yesterday after the metal hit its Q4 forecast of $4,450 per ounce ahead of schedule. Now, the bank sees gold climbing to $5,000 per ounce by the end of next year on the back of heavy central bank buying, strong ETF inflows, and a steepening yield curve.

Digging for profits: Even if you’re not all-in on the real thing, gold mining stocks could actually be a better way to add exposure to your portfolio, BCA Research argued in a recent note. Unlike gold itself, companies mining the precious metal have fixed operational costs and see huge profit margins when its price pops off.

So if your plan was to frantically stock up on gold bars from Costco, maybe put some of those down before security starts looking at you funny.—LB