Gold Prices Soar on Surprise US Treasury Liquidity Support Announcement

Gold prices surged on Thursday morning in India as US Treasury yields declined sharply and the dollar remained subdued following a surprise liquidity support announcement by the US Treasury. On the Multi Commodity Exchange (MCX), gold futures for October delivery rose Rs 447 per 10 grams to Rs 1,58,443. December contracts jumped above Rs 1.6 lakh per 10 grams, while February contracts traded above Rs 1.62 lakh per 10 grams.

In the international market, gold hovered near its highest level in more than two months on Thursday after a surprise liquidity support announcement by the US Treasury pushed yields and the dollar lower. Spot gold jumped to $4,526 per ounce, the highest level since June 2. The US Treasury Department's decision to double the size of liquidity support buyback operations for longer-dated notes and bonds led to a decline in US Treasury yields.

According to Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities, higher crude prices and continued uncertainty after the US-Iran MOU ended without fresh talks kept sentiment cautious for gold in the previous session. However, he noted that the Strait of Hormuz remains a key geopolitical trigger, while markets will also track the FOMC meeting minutes, US jobs data, and crude movements for further direction.

Some analysts believe that the recent pullback in gold prices may have created an opportunity for investors to gradually accumulate the yellow metal. Jefferies' Global Head of Equity Strategy Christopher Wood and billionaire hedge fund manager John Paulson both think that gold could be at the beginning of a long-term bull run. Paulson, who turned his attention to gold in 2009 after making one of Wall Street's most profitable bets against subprime mortgages, said in an interview with CNBC that demand for gold could continue to rise as confidence in paper currencies wanes.