Treasury Buybacks Drive Gold Back Toward $4,500

Cutting long-term yields, the expanded buyback program has made non-yielding gold more attractive while investors weigh the Fed’s next move.

Overview

Gold jumped about 4% on Wednesday after the U.S. Treasury said it would at least double some long-dated bond buyback operations, and the metal is now trading near $4,500 an ounce.
The Treasury’s larger purchases increased demand for long-dated Treasuries and pushed those yields lower, which reduces the opportunity cost of holding non-yielding bullion.
July Federal Reserve minutes show several officials open to raising rates if inflation stays high, but market pricing gives roughly a two-thirds chance the Fed will pause in September.
A World Gold Council survey found 45% of central banks plan to add gold to reserves, and analysts say rising central-bank buying plus U.S. debt above $40 trillion add structural support to prices.
Look ahead for movements in the 10-year Treasury yield, U.S. inflation data, and upcoming economic reports since firmer yields or a stronger dollar could quickly reverse the rally.