Gold Price Surges $180 on US Treasury Bond Buyback Announcement
The gold price surged to $4,551.10 per ounce on Wednesday after the US Treasury Department announced it would double its bond buyback ceiling to $4 billion per quarter through November.
This move aims to cap yields at the long end of the curve by expanding purchases of longer-dated government debt, making the opportunity cost of holding a zero-yielding asset like gold lower.
However, the market's reaction exposed a curious tension, the yield on 30-year US Treasuries touched a 19-year high, indicating mixed signals from the curve even as policymakers lean on buybacks.
The World Gold Council reported that central banks continued to provide a 'formidable floor' under the market, with second-quarter net purchases of 288.9 tonnes, a 62 percent jump from the same period last year and the strongest Q2 figure in their records.