Gold and Bitcoin Surge as US Bond Market Falters

Gold prices reached a three-month high of $4,601 and Bitcoin surged over 22% to $79,400 as investors fled a weakening US dollar and a sell-off in the US bond market. The turmoil stems from concerns over US fiscal sustainability and spiraling debt, compounded by the economic policies of Donald Trump and his administration's conflict with Iran.

To stabilize prices and manage borrowing costs, the United States Department of the Treasury expanded its bond-buying program and doubled long-term debt buybacks. Treasury Secretary Scott Bessent signaled these measures were necessary to prop up bond prices. These shifts contributed to a rally in precious metals globally, with gold and silver hitting three-month highs in India.

Geopolitical tensions intensified as the Trump administration announced its toughest economic sanctions to date against Iran. Iran dismissed the sanctions and criticized the United States for its rising debt and interest payments. Despite the financial volatility, the US private sector reached a four-year growth high in August, driven by a strong services sector. Investors continue to monitor S&P purchasing managers’ index data for clues regarding future interest-rate policy from the Federal Reserve System.