Gold jumped Wednesday after the U.S. Treasury said it would at least double its bond buyback operations, driving down government bond yields, while Federal Reserve minutes showed several officials ready to raise rates over persistent inflation. A weaker dollar added support to bullion, while rising oil prices added further pressure.
Spot gold rose 3.4% to $4,483.43 an ounce at 14:25 ET, while gold futures gained 2.2% to $4,517.20 an ounce. The move reversed a sharp drop a day earlier and came as U.S. government bond yields fell sharply after the Treasury Department laid out plans to expand its buyback program.
Treasury buyback plan pulls yields lower
The Treasury Department said in a statement that it was not looking to use buyback operations to "mitigate episodes of acute market stress," though such actions have been used before to shore up bond market liquidity. Bullion had sunk on Tuesday after the 30-year Treasury yield briefly reached an almost two-decade peak and 10-year yields stayed close to their highest levels since early 2025. Higher yields hurt gold because bonds become more attractive when they offer better returns, while bullion pays no interest, raising the opportunity cost of holding gold.
Fed minutes show inflation concern
Federal Reserve officials showed increased concern about inflation at their July meeting, with several policymakers prepared to raise rates immediately, according to minutes from the July 28-29 meeting released Wednesday. Many officials said a rate increase would be necessary if inflation fails to fall to the central bank's 2% target. Those policymakers argued price pressures appeared widespread and warned that delaying action could risk a steeper and costlier tightening later.
The Fed voted at the meeting to keep its benchmark rate unchanged in the 3.50%-3.75% range, with three policymakers dissenting in favor of a quarter-point increase.
Oil and a weaker dollar add pressure
Oil prices have also risen as the standoff in the Middle East continues, adding pressure on gold, since higher energy prices can feed directly into inflation. The outlook for oil remains tied to the Strait of Hormuz, through which about one-fifth of global oil and liquefied natural gas flows passed before the Iran war began in late February. President Trump said Tuesday that no talks were underway with Iran, and the ceasefire framework signed in June has expired without an extension.
Meanwhile, the U.S. dollar index dipped 0.6% to 99.02, a move that can bolster gold by making it cheaper for overseas buyers.
Source: Commodities & Futures News
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