Gold Gains Momentum as Treasury Bond Buybacks Ease Pressure

The price of gold (XAUUSD) has risen towards $4,540 as the U.S. Treasury prepares to increase purchases of longer-dated bonds, which could help ease pressure on long-term yields and lower borrowing costs.

Treasury Secretary Scott Bessent said that the buybacks could exceed $4 billion, a move that would support the gold outlook by making it less costly to hold non-yielding assets. This policy signal may also boost demand for silver (XAGUSD), which tends to follow gold's price during major precious metals rallies.

However, energy-induced inflation remains a risk for both metals, and higher energy prices could maintain inflation at a higher level and provide a reason for the Federal Reserve to further increase rates. There is still a 36.2% chance of a rate hike during the next meeting, despite easing expectations from 45% a month ago.

The gold price has broken above $4,400 on the daily chart, opening the door for a move towards the $5,000 area. The RSI remains elevated at 67, but there is still potential for gold to rise due to its strong momentum.