Gold was largely holding its biggest gain in six months after the US Treasury Department made a surprise move to rein in long-term borrowing costs.
Bullion was trading in a narrow range around $4,500 an ounce, after surging more than 4% the day before. The Treasury unexpectedly on Wednesday announced it was ramping up buybacks of long-dated government debt, signaling it wants to lower borrowing costs after yields hit multi-decade highs. That boosts the appeal of holding gold, as it doesn't pay interest.
The department said it's "increasing, by at least double, the size of liquidity support buyback operations" for securities dated from the 10-year to the 30-year sector. Hours later, it disclosed that total US public debt had surpassed $40 trillion for the first time.
While the move signals greater official support for the Treasury market and potentially easier financial conditions - which lowers the opportunity cost of holding gold - headwinds remain. "The path is unlikely to be linear after the sharp move higher," said Christopher Wong, a strategist at Oversea-Chinese Banking Corp. "The key for a more sustained move higher is whether the decline in yields persists and ETF inflows broaden." Gains may also be tempered by energy-led inflation pressure. Oil held a gain, as prospects for a peace deal between Washington and Tehran over the Strait of Hormuz remained dim and a spat between the United Arab Emirates and Iran added to tensions in the Middle East. More Federal Reserve officials supported raising US interest rates last month than the three who formally dissented, while others indicated they could back a hike if inflation fails to improve, according to minutes of the central bank's July meeting released Wednesday. Higher rates are typically negative for bullion, which carries no interest. Gold has held largely above the key $4,000-an-ounce support threshold in recent weeks, with dip-buyers emerging in growing force since a war-driven slump that pushed it into bear territory in June. It is still down around 15% from before the US-Iran conflict erupted in late February. Spot gold declined 0.4% to $4,495.89 an ounce at 10:10 a.m. in Singapore. Silver declined 0.7% to $67.11 an ounce. Platinum and palladium edged lower. The Bloomberg Dollar Spot Index, a gauge of the US currency, was marginally higher after ending the previous session down 0.8%. ALSO READ: Robert Kiyosaki Names His Best Commodity Choice For August 2026 |
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