Dollar Weakness Sparks Gold and Bitcoin Rally Amid US Treasury Buybacks
The US Treasury's decision to double its buybacks of longer-dated government bonds has sent shockwaves through global markets, leading to a weak dollar, surging gold prices, and a significant rally in Bitcoin.
On August 19, the dollar index DXY fell by nearly 1% to around 98.8, its lowest level since May 29, while gold climbed over 2% to reach $4,480 per ounce, its highest price since early June. Meanwhile, Bitcoin jumped as much as 8% to $69,749 intraday.
The common thread behind these market movements is the US Treasury's decision to double its liquidity support buybacks from $2 billion to at least $4 billion per operation, effective September 9 through November 4, 2026. This move has pushed long-term yields down, stripping the dollar of its rate advantage and making it less attractive compared to other assets.
The gold-Bitcoin pair is particularly noteworthy, as both assets are often seen as rivals but on this day, they behaved like siblings, both benefiting from the weakening dollar. This macro turn may be a trendsetter for the weeks ahead, with several factors to watch, including the Fed minutes and data flow, the dollar index around 98, and whether Washington doubles down on its buyback plan.