Gold Prices Soar to Mid-May Highs Amid Treasury Buyback Frenzy

Gold prices rose sharply on Tuesday, reaching their highest level since May 14, as buying momentum continued to build. The precious metal gained 0.6% to $4,676.75 per ounce, with U.S. gold futures rising 0.8% to $4,734.50.

The rally is driven by the U.S. Treasury's recent announcement of doubling the size of liquidity support buyback operations for longer-dated notes and bonds. This move has sparked a surge in bond yields, which gold investors are seeking to hedge against.

Citi raised its zero-to-three-month gold price target on Monday to $4,800 an ounce, citing an eventual easing of tensions around the Strait of Hormuz, lower real interest rates, and a less hawkish Fed. The bank kept its six-to-12-month target at $5,000.

The focus now shifts to key U.S. inflation data due on Wednesday and a speech by Federal Reserve Chairman Kevin Warsh later this week, which is expected to provide clues on interest rates.