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Gold jumps 3.7% to $4,495 after Treasury buyback shock lifts bullion
The move followed a sharp drop in the Dollar, with the Dollar Index sliding about 0.8% to around 98.85, while the 30-year Treasury yield fell from above 5.33% to about 5.20%.
Gold rallied 3.7% to $4,495 on August 19, marking its strongest level since early June, after an unexpected Treasury buyback decision triggered a reversal in long-end US yields and the US dollar, according to Action Forex.
The outlet said the 30-year Treasury yield dropped from this week’s near-two-decade high above 5.33% to around 5.20%, while the 10-year yield retreated from about 4.75% to 4.65%. At the same time, the Dollar Index fell roughly 0.8% to a fresh three-month low near 98.85.
Action Forex attributed the catalyst to the Treasury Department’s plan to at least double maximum size of long-dated debt buybacks, increasing the cap from $2 billion to at least $4 billion for 10 to 20 year and 20 to 30 year maturities, scheduled from September 9 through November 4.
The surge also stood out for how closely gold tracked broader risk assets, with the outlet noting gold rose alongside equities and Bitcoin, consistent with a real-yield and weaker-dollar backdrop rather than classic risk aversion. Action Forex added that the reaction occurred even after the release of more hawkish-than-expected July FOMC minutes, with bond-market repricing driving the move before Treasury purchased additional bonds.
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