WASHINGTON (dpa-AFX) - Extending two days of gains, gold prices have soared on Friday as safe-haven demand for the U.S. dollar diminished following yesterday's announcement by U.S. President Donald Trump indicated a shift in the strategy against Iran from military aggression to economic pressure.
Front Month Comex Gold for September month delivery has surged by $108.80 (or 2.41%) to $4,629.50 per troy ounce.
Front Month Comex Silver for September month delivery has also soared by $1.455 (or 2.14%) to $69.560 per troy ounce.
Yesterday, accusing Iran of failing to utilize the chances given to strike a deal with the U.S., Trump announced a crushing economic operation against Iran on a scale never seen before.
Calling it 'economic D-day' for Iran, Trump aimed to isolate Iran and threatened that any other nation that allows its financial institutions, businesses, airports, or other entities to be used to support Iran would face similar action.
However, Iran downplayed Trump's threats. Iran's Foreign Minister Abbas Araghchi called it a mere diversionary tactic by the Trump administration to turn global attention away from the humongous debt facing the U.S.
Trump's avoidance of any aggressive military action against Iran has eased concerns of an extended war in the Middle East.
At the same time, the strong exchange of rhetoric by both nations has diminished the expectations for any near-term end to the gulf crisis through diplomatic route.
The U.S.-Iran standoff has resulted in the Strait of Hormuz being effectively shut with traders unable to see any indication of an earlier reopening.
Crude oil prices continued to move on the upside for the fifth day yesterday.
On the monetary front, on Wednesday, an update from the U.S. Treasury Department showed that the total U.S. Federal debt crossed $40 trillion as of mid-August. This number is estimated to be roughly $10 trillion more than the U.S. Gross Domestic Product.
The same day, U.S. Treasury Secretary Scott Bessent stated that his department would increase the size of buybacks by at least double for longer-dated securities.
Bessent added that the Trump administration is contemplating announcing an increased focus on fiscal consolidation. Bessent's message sent yields sharply lower.
On Thursday, in an interview with CNBC, Bessent stated that the accelerated buyback of debt could exceed the announced $4 billion.
Speaking of the Middle East crisis, Bessent viewed that the latest measures by Trump to enforce a stringent economic squeeze on Iran would negate the need for any U.S. military operations.
Today, the U.S. dollar continued to face downside pressure as the safe-haven demand receded, which supported gold prices.
The minutes from July meeting of the U.S. Federal Reserve released on Wednesday showed that a number of policymakers indicated their preference to raise interest rates if U.S. inflation fails to pull back near the 2% target.
Currently, investors are betting on a 38.40% chance of a 25-basis-point interest rate-hike at the Fed's upcoming meeting on September 15-16, while the odds on rates being held at the current level stand at 61.60%, according to the CME Group's FedWatch Tool.
The U.S. dollar index was last seen trading at 98.81, down by 0.09 points (or 0.09%) today.
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