Gold prices recently eclipsed $4,500 per ounce, continuing a robust upward trend as declining long-term Treasury yields and a softer U.S. dollar overcame a more hawkish tone from the latest Federal Reserve meeting minutes.
During the trading session, gold reached $4,500 briefly, marking its highest point in about two months. Spot gold was later priced around $4,488, reflecting a 3.6% increase, while U.S. gold futures finished 2.8% higher at $4,545.30. This movement also pushed gold above its significant 100-day moving average, which is positioned near $4,381.
This upward momentum follows several weeks of positive trends. The latest gold price forecast from Coinpaper identified the $4,440–$4,450 range as a critical resistance level, while UBS continues to aim for a long-term target of $5,000.
Treasury Buybacks Lower Bond Yields
The main driver in this situation came from the U.S. Treasury rather than the Federal Reserve.
The Treasury announced it would double the size of buybacks for longer-term government bonds, offering relief to a market that had seen 30-year yields surge to their highest since 2007.
As a result, the 30-year Treasury yield dipped nearly 10 basis points to approximately 5.19%, down from a peak of 5.337% the previous day.
Decreasing bond yields generally bolster gold, as the precious metal doesn’t yield interest, thus lowering the opportunity cost of holding physical gold. Additionally, the dollar index fell by about 0.8%, making gold priced in dollars more affordable for international investors.
The dynamics involving gold, bond yields, and the dollar have played a significant role this month. Coinpaper recently explored how gold has been outperforming Bitcoin amidst weakening Treasury yields and a declining dollar.
Fed Minutes Signal Continued Rate Hike Concerns
The rally persisted even after the Federal Reserve published the minutes from its July 28–29 gathering, revealing escalating worries about stubborn inflation.
Some policymakers expressed readiness to increase rates during the July meeting, and many noted that additional tightening could be necessary if inflation does not trend back toward the Fed’s 2% goal. Ultimately, the central bank maintained rates between 3.50% and 3.75%, with three officials advocating for a quarter-point hike.
The short-term yields reacted more sharply to the hawkish sentiment, with the two-year Treasury yield rising following the release of the minutes. Conversely, longer-term yields remained subdued owing to the Treasury buyback announcement.
The substantial rise in gold prices also extended to other precious metals, with silver climbing nearly 4%, platinum increasing by about 5.1%, and palladium moving up 2.7%, indicating wider interest in the sector.
For gold, the upcoming test will be whether it can maintain its position above the $4,500 mark. A sustained breakthrough would reinforce the bullish outlook, while a drop below this level could convert $4,500 into a new resistance point.