Gold surges past $4,500 as US Treasury expands bond buybacks

Precious metals extended their upward trajectory on Wednesday, with gold surging more than 4% to surpass the $4,500 per ounce threshold, as the US Treasury Department unveiled plans to significantly expand its repurchase operations for longer-term government securities. The yellow metal climbed 4.3% to approximately $4,520 per ounce by 2030GMT, while silver posted even stronger gains, rising 5.3% to reach $66.70. The rally was fueled by a sharp decline in US Treasury yields following the Treasury's announcement, which triggered a broad-based rally in the government bond market.

Treasury buyback program fuels bond market rally

The Treasury Department confirmed it intends to at least double the size of its buyback operations for notes and bonds with maturities between 10 and 30 years, with individual repurchase operations expected to rise from $2 billion to at least $4 billion. The yield on the 30-year Treasury bond dropped toward 5.2%, retreating from Tuesday's peak of 5.34%—its highest level since 2007. The 10-year yield also declined after approaching its steepest point since early 2025. Treasury officials emphasized that the expanded operations are designed to support market liquidity rather than address episodes of acute market stress.

Weaker dollar and falling yields boost bullion demand

Lower bond yields traditionally support gold by reducing the opportunity cost of holding non-interest-bearing assets, while a weaker US dollar further enhanced the appeal of precious metals. The dollar index, which measures the greenback against a basket of major currencies, declined approximately 0.9% to 98.70. Investors are now turning their attention to the minutes from the US Federal Reserve's July meeting, which are expected to provide insights into policymakers' inflation assessment and the likely future trajectory of interest rates. Any signals regarding monetary policy easing could provide additional momentum for gold and silver prices.