Gold prices reached a three-month high as the U.S. Treasury increased buybacks of longer-dated government debt.
Gold prices surged to their highest level in nearly three months on Wednesday, driven by a strategic move by the U.S. Treasury to double the size of liquidity-support buyback operations. The Treasury Department's decision to increase buybacks of longer-dated government debt from $2 billion to $4 billion helped lower Treasury yields and weaken the U.S. dollar, providing a significant boost to precious metals. Bart Melek, global head of commodity strategy at TD Securities, noted that the drop in the U.S. dollar and the user of Treasury buybacks to calm bond markets has been a primary driver of the rally. While the Federal Reserve continues to monitor inflation concerns, the combination of falling real yields and a weakening currency has strengthened gold's appeal as a defensive asset. Technical analysts observed that gold broke above the 200-day moving average, a bullish signal for investors. Despite some retail buyers in India being deterred by high prices, demand in China remained steady.