Treasury Cash Pile Fuels Gold Rally Amid Bond Buyback Plans
The US Treasury Department has signaled its intention to buy back bonds using a $935 billion cash pile in the Treasury General Account, sending gold prices higher and silver lower.
The move, announced by Treasury Secretary Scott Bessent, aims to fund bond buybacks with short-term issuance, a tactic dubbed the 'Treasury Twist'. The TGA stood at $935 billion as of August 20.
Gold prices climbed 1.2% to near a four-month high around $4,719 an ounce, while the 10-year Treasury yield fell by up to four basis points to 4.69%. However, silver slipped by about 1%, still trading below its $70 resistance level.
RBC Capital Markets' head of US rate strategy, Blake Gwinn, expressed skepticism over the effectiveness of the move, calling it a 'very slapdash attempt to try to stem the selloff'. The Treasury's intentions will be closely watched in the coming days, particularly as Fed Chair Kevin Warsh delivers his first Jackson Hole speech on Friday and July PCE data is released on Wednesday.