Treasury Buybacks Send Gold Prices Soaring Over 3%

Gold prices surged more than 3% after the US Treasury announced it would double its 'liquidity support' buybacks for longer-dated government bonds. This move helped pull down 30-year yields and the dollar, which tends to lift dollar-priced gold.

The Treasury's buyback program involves repurchasing older, less-traded bonds to improve market liquidity and reduce long-term yields. By increasing these operations at the long end of the curve, the Treasury can temporarily reduce the amount of long-maturity bonds investors have to absorb.

This development is significant for gold because it doesn't pay interest, so when real yields (interest rates after inflation) fall, holding gold looks less costly. The price of spot gold rose 3.6% to $4,487.91, while other precious metals like silver, platinum, and palladium also moved higher.

The Fed's next set of meeting minutes will shape expectations for policy rates, but this episode highlights how market 'plumbing' changes can move long-term rates even without a new Fed decision.