Treasury Buybacks and Central Banks Fuel Gold Price Rally
The US Treasury's decision to raise its long-dated bond buyback cap from $2 billion to $4 billion has contributed to lower long-term yields, supporting spot gold prices above $4,600 per ounce. This move is distinct from the Fed's rate-setting decisions and provides a separate catalyst for gold prices. The 10-year Treasury yield fell by 5.7 basis points to 4.647%, while the 30-year yield decreased by 9 basis points to 5.196% after the announcement.
Central banks continued to purchase gold, adding a net 288.9 tonnes in the second quarter of 2026, a 62% year-over-year increase according to World Gold Council data. This growth in central bank demand is independent of the Treasury's actions and provides an additional source of support for gold prices.
Despite higher gold prices, mine production has not increased significantly due to a decline in recycling by 6%. Total gold supply held at 1,269 tonnes in the second quarter of 2026, as a 2% year-over-year rise in mine output was offset by this decrease. Integra Resources' Florida Canyon operation saw a 32% increase in material movement but a 9% decline in gold production.
Stronger gold prices have improved project economics for several producers without securing immediate construction capital, as seen with i-80 Gold's Lone Tree autoclave refurbishment and West Red Lake Gold Mines' shaft refurbishment. Mineros S.A.'s Porvenir project has a pre-feasibility study indicating positive economics but still requires a funding structure to be disclosed.