Gold Holds Rally on Lower Treasury Yields

Gold held around $4,500 an ounce on Thursday after surging more than 4% in the previous session, underpinned by a sharp retreat in US Treasury yields as the government moved to rein-in long-term borrowing costs. The US Treasury Department announced it will more than double repurchases of 10-, 20- and 30-year debt in the next few months as the 30-year yield surged to its highest level since 2007 earlier this week. Lower borrowing costs reduce the opportunity cost for markets to hold precious metals, which carry no coupons, making them more attractive to investors. Meanwhile, minutes of the Federal Reserve's July meeting confirmed that some policymakers argued in favor of raising interest rates this year to prevent sharper inflationary pressure later on. Elsewhere, heightened uncertainty in the Middle East as the US and Iran remain at a stalemate kept inflationary risks in focus.

Gold prices rose to $4,480 per ounce on Wednesday, the highest since early June, tracking the rally for long-dated US Treasuries after the Treasury Department doubled the buyback of notes and bonds in the upcoming financial quarter. It marked another effort by Washington to contain soaring yields in the longer portion of the curve, following Secretary Bessent's call for higher limits on the Federal Reserve's FIMA facility. Lower borrowing costs reduce the opportunity cost for markets to hold precious metals, which carry no coupons. On top of that, the initial increase in dollar liquidity due to the measures also aid gold prices. Meanwhile, minutes of the Federal Reserve's rate-setting meeting confirmed that a portion of policymakers argued that raising rates this year could prevent sharper inflationary pressure later on.

Gold prices rose to $4,480 per ounce on Wednesday, the highest since early June, tracking the rally for long-dated Treasuries after the US Treasuries announced it would double the buyback of notes and bonds in the upcoming financial quarter. The Treasury Department stated it would raise its buyback limit to $4 billion on the quarter to November, another effort to contain soaring yields in the long-term of the curve, following Secretary Bessent's call for higher limits on the Federal Reserve's FIMA facility. Lower borrowing costs reduce the opportunity cost for markets to hold precious metals, which carry no coupons. On top of that, the initial increase in dollar liquidity due to the measures also aid gold prices. Meanwhile, the Fed is due to release minutes from the Fed's last meeting. The resulting decision was of a rate hold, although three FOMC members dissented on the hawkish side.