Gold Price Plummets as Bond Yields Recover

The price of gold plummeted over 8.5% from its $4,700 peak in mid-August, wiping out gains triggered by increased Treasury liquidity support.

Bitcoin, however, remained relatively stable at around $77,000 and still held about a 20% gain from the $64,000 level where its rally began.

The market's volatility started in mid-August after the US Treasury Department announced a larger liquidity-support program for long-dated government debt. This move pushed bond yields lower and lifted risk assets, causing gold to jump quickly while Bitcoin broke higher.

The shift came on August 19 when Treasury Secretary Scott Bessent said the government would double the maximum size of liquidity-support buybacks from $2 billion to $4 billion per operation.