Treasury's Debt Purchase Expansion Sends Gold Soaring to Two-Month High
The US Treasury's surprise move to expand purchases of longer-dated debt has given gold its strongest macro tailwind in weeks. Spot gold traded near $4,512 an ounce on Thursday after touching a two-month high of $4,525.79.
This follows the Treasury's announcement that it would at least double the maximum size of liquidity-support buybacks for 10- to 30-year securities from $2 billion to at least $4 billion per operation between September 9 and November 4.
The move has pulled the 30-year Treasury yield back towards 5.2% after it reached its highest level since 2007, while the 10-year yield retreated. The dollar also weakened against several major currencies.
Impax's Ross Pamphilon sees the near-term impact of this programme as modest, with longer-term borrowing costs still dependent on the government addressing its fiscal position.