US Treasury’s $4 billion bond buyback plan pressures the USD, boosting gold’s appeal as yields cool and foreign demand rises.
Gold (XAU/USD) surged to $4,625 in early Asian trading, its highest level since May 15, driven by a weaker US Dollar (USD) following the Treasury’s buyback plans. The department announced it could expand bond repurchases beyond $4 billion, cooling Treasury yields and reducing the USD’s strength.
The move follows last week’s decision to double buybacks of longer-dated securities, which has made gold more attractive to foreign buyers. Analysts note technical momentum could push prices toward $4,700 if the trend persists, though energy-driven inflation concerns may limit gains.
While gold benefits from a softer USD, expectations of Federal Reserve rate hikes due to Middle East tensions could cap its upside. The metal remains sensitive to inflation hedging but struggles in high-rate environments.