Gold has surprised the markets again. After chaining months of sharp falls from the all-time high it set in January 2026, the metal rallied strongly in August: it rose almost 10% in the month and briefly surpassed USD 4,700 per ounce.
Behind this turn there are several known factors – weak dollar, geopolitical tension, expectations about interest rates – but also a relatively new one: concern about the sustainability of the US public debt, which is beginning to play an increasingly relevant role as an argument in favor of gold as a safe haven asset.
The trigger: the Treasury goes out to buy long-term debt
The rally accelerated after the US Treasury’s decision to increase its purchases of long-term government bonds, with the aim of curbing yields that had reached levels not seen since 2007. The measure had its immediate effect: it lowered long-term rates and weakened the dollar, fueling what is now known as a “devaluation strategy”: buying scarce assets – gold, and also bitcoin – as a hedge against the increase in public debt and a possible loss of value of the currency.
Diego Franzin, head of portfolio strategies at Plenisfer Investments, summarizes it like this: the traditional story associates gold with geopolitics or inflation, but in recent months the market has focused on the relationship between US debt, the management of the Treasury yield curve and the behavior of the dollar.
All in all, gold is still about 18% below its January peak. Meanwhile, the outbreak of the conflict in Iran led many investors to sell gold to cover positions in other assets under pressure, causing a drop of more than 25% between January and July.
Treasury versus Federal Reserve: two forces in opposite directions
The market itself recognizes that the Treasury buyback plan has been the most recent catalyst: the dollar index fell about 0.9% in the week after the announcement, while gold rose more than 5%.
But opposite is the Federal Reserve. At the Jackson Hole symposium, its president, Kevin Warsh, insisted on the control of inflation and the independence of the central bank, a message that the market read as a “hawk.” The result: dollar and real yields on the rise, gold on the decline. In fact, as the probability of a rate hike in September gained weight, gold fell by nearly 7% in just a few days.
Franzin qualifies: this movement does not invalidate the structural arguments in favor of gold, but it makes it clear that the path is not going to be linear. If the market continues to view the Fed as an institution focused on price stability, the dollar will have support and gold could go through phases of consolidation.
Central banks and ETFs: structural demand remains firm
Short-term noise aside, underlying demand for gold remains solid. According to the World Gold Council, central banks bought 289 tonnes in the second quarter, 62% more than a year earlier, with China accumulating reserves and Poland the largest buyer. The Council itself expects this trend to continue over the next twelve months.
Added to this is a change in investment trend: global flows into gold ETFs, flat in the second quarter, moved to net inflows of around $2 billion in July, according to Morningstar data. Physical demand, especially from China, is also supporting the price.
Can gold return to $5,000?
The most optimistic forecasts point high. Mark Haefele, chief investment officer at UBS Wealth Management, expects gold to reach $5,400 per ounce in the next twelve months, supported by rising global public debt and uncertainty over how it will be financed.
Imaru Casanova, manager of VanEck, is optimistic but more cautious: she points to sustained purchases by central banks, the growing weight of fiscal policy over monetary policy, a still low positioning in the West and the evolution of the Fed as key factors. The market consensus places the average price of gold above USD 4,000 in the medium term, although – it warns – this is a conditional scenario, not guaranteed. A weaker dollar and falling real rates would give gold more mileage; a restrictive Fed and a strong dollar would work against them.
Gold miners, the big beneficiaries of the rebound
If something has stood out in this rally, it has not been physical gold, but the shares of mining companies. The Morningstar Global Gold Index, which groups gold exploration, mining, processing and smelting companies, rose 31.8% in August, well above spot gold’s 9.7%.
The explanation lies in operating leverage. Miners behave like a leveraged bet on the price of gold, not as a simple reflection of the metal: their income rises with the price of gold, but a good part of their costs—labor (35%-50% of the total maintenance cost) and energy (15%-20%)—are much more rigid. When gold rises faster than costs, margins skyrocket. According to Nicolò Bragazza, portfolio manager at Morningstar Wealth, gold producers are experiencing the perfect combination today: record prices and cost discipline.
This higher profitability has its counterpart: more operational and specific risk for each company, which translates into more volatility. Bragazza himself sums it up: for those seeking pure exposure to gold, direct investment in the metal remains the clearest option; For those who also seek income, mining companies—which can distribute dividends without losing exposure to raw materials—may be an alternative to consider.