Precious metals rally after U.S. Treasury doubles liquidity support buybacks, pressuring the dollar and long-end yields.
Silver (XAG/USD) climbed to $65.80 on Wednesday, extending gains alongside gold (XAU/USD), which neared $4,500. The move followed the U.S. Treasury’s announcement to at least double its liquidity support buybacks for longer-dated coupon securities starting September 9, aiming to curb rising long-end yields.
Prior to the announcement, markets had priced a 60% chance of a September rate hike, but softer July inflation data and a 23K drop in payrolls shifted expectations. The July FOMC minutes revealed policymakers still viewed inflation as elevated, though three regional Fed presidents dissented, favoring a hike. Despite the hawkish tilt, traders dismissed the minutes as outdated.
The dollar’s decline and reduced rate hike odds created a supportive backdrop for metals. XAG/USD held above its 20-period SMA at $64.84, maintaining a bullish near-term bias.