Treasury's Bond Buyback Plan Sends Gold Prices Soaring

Gold prices surged by 3% to around $4,460 per ounce on Wednesday as US Treasury yields fell sharply following the Treasury Department's announcement of expanded bond buybacks. The move is intended to support market liquidity, not mitigate episodes of acute market stress.

The maximum size of individual repurchase operations for securities with maturities between 10 and 30 years will rise from $2 billion to at least $4 billion under the plan. This decision has triggered a rally in the US government bond market, causing yields on longer-term notes and bonds to drop significantly.

The decline in Treasury yields generally supports gold by reducing the opportunity cost of holding non-interest-bearing bullion. Meanwhile, the weakening US dollar also contributed to the rise in precious metals, with the dollar index falling around 0.7% to 98.86.