Gold and silver gained during the trading session on Wednesday, August 19 as US Treasury's buyback plan weakened dollar and pushed bond yields lower, boosting the precious metals.
At 9:33 am on Wednesday, the MCX gold September futures contract rallied 2.32% or Rs 3,554 to Rs 1,56,637 per 10 grams, while the MCX silver September futures jumped 2.05% to Rs 2,37,172 per kg.
Spot gold rose 3.7% to $4,495.4 an ounce at 8:03 pm IST, while silver advanced 4% to $65 . The Bloomberg Dollar Spot Index dropped 0.7%.
Globally, gold climbed to its the highest level since early June after US government bond yields dropped as the Treasury announced surprise liquidity injection, a tailwind for the precious metal.
US Treasury said it's increasing buybacks of long-dated government debt, indicating that the US wants to lower borrowing costs after yields hit multi-decade highs. A significant jump in 30-year bonds pushed yields lower while the dollar weakened, advancing bullion price nearly 4%.
The buyback announcement comes two weeks after the Treasury released its planned schedule for buybacks this quarter. Treasury 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.
With the latest buyback plan, Bullion traders are likely to pay increasing attention to further measures aimed at supporting the US Treasury market.
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