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Scott Bessent should start calling himself “Goldfinger.”
Gold is having its best month since January, and nobody at the Fed did a thing to cause it. The metal traded around $4,641 midday Tuesday, up roughly 14% on the month and holding near a 3-month high, though still well shy of where it sat in January.
Half the standard explanation works. A dollar index down 0.8% this month makes dollar-priced bullion cheaper for anyone holding euros or yen. The other half is a bit of a mess as bond yields have soared this year, with the 30-year touching levels last seen in 2007. High yields are supposed to be a problem for gold prices, as every basis point makes a rock that pays you nothing look worse next to a Treasury that pays you plenty. Yet, gold is up 14% regardless.
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The contradiction is why this rally’s return address is not the Eccles Building. Instead, it traces straight back to our very active Treasury Secretary. Bessent doubled long-end buybacks this month, with reporting that he may tap the Treasury General Account to fund more of them. Buyers started reading yields as a symptom of a broader disease, because a government that has to intervene in its own bond market to keep borrowing costs down is telling you something about the currency those bonds are denominated in. Traders have a name for the response, and “the debasement trade” is the same one that carried gold 65% higher in 2025.
Something stranger sits underneath. Central banks bought 288.9 tonnes of gold in the second quarter, up 62% from a year earlier and a record for the period, and they did that buying while the price was falling. Retail ETF holders went the other way and pulled 45 tonnes out. The institutions that issue currency for a living spent the drawdown accumulating the alternative, and the people who own the ETF version sold it to them.
Fed Chair Kevin Warsh delivers his first Jackson Hole keynote Friday, carrying minutes that show several of his own participants ready to hike. A hawkish speech would ordinarily be the thing that ends a gold rally, but it would maybe just stall this one for a session or two. What it cannot do is unwind the reason the rally started, because the Fed does not control the buyback program, the deficit, or the man running both. Bessent has already told everyone he is prepared to do more, and gold loves Scott Bessent.
