Spot gold dipped 1.26% to $4,466.13 an ounce at 6:14 pm IST on Friday, retreating below the $4,500 level after hitting a more-than-two-month peak of $4,525.79 on Wednesday. The precious metal had gained more than 4% on Wednesday following a surprise US Treasury liquidity-support announcement for long-duration bonds. As per Kotak Securities, Kaynat Chainwala, AVP - Commodity Research, believes that spot gold's retreat below $4,500 an ounce looks like consolidation rather than a reversal of the broader bullish trend, with $4,400 standing out as strong support on the downside. The $4,400 to $4,500 price range has been cleared, with market analysts noting that if prices hold above this range, upward momentum is likely to continue.
The U.S. Department of the Treasury announced a significant expansion of its liquidity support buyback operations for longer-dated securities. As reported by Reuters, the maximum buyback size will increase from $2 billion to at least $4 billion per operation, effective September 9, 2026, and remaining in effect through November 4, 2026. This represents a 100% increase in the program's capacity, targeting the 10-year to 30-year sector of the bond market. The announcement followed a bond selloff that pushed the 30-year Treasury yield to its highest level since 2007, with yields falling after the news, easing pressure on a strained bond market. TD Securities noted that the Treasury's announcement has given metals a "jolt of life," with expectations that flows could quickly return amid Treasury liquidity support and a growing stagflation narrative.
The Treasury's intervention provided significant relief to global markets, with the US dollar hovering near three-month lows following the announcement. The significant jump in 30-year bonds pushed yields lower while the dollar weakened, making dollar-priced gold less expensive for holders of other currencies. The dollar recently touched a three-month low against major currencies, making dollar-priced gold cheaper for foreign buyers. The cooling of long-end global borrowing costs provided immediate relief to European equity valuations amid ongoing geopolitical pressures. The Economic Times reports that total U.S. debt has topped $40 trillion for the first time, drawing fresh warnings that a fiscal crisis is brewing as ballooning costs for social safety-net programmes and interest payments far outstrip revenues held back by tax cuts. Net interest payments on federal debt hit $628 billion over the fiscal year's first seven months, already topping the government's $588 billion in Medicare spending over the same stretch.
Market expectations for Federal Reserve policy have shifted following the Treasury announcement, with Federal Reserve minutes scheduled today being important for rates trajectory ahead. Federal Reserve minutes released this week revealed a split committee, with several policymakers saying they would support a rate hike if inflation stays above the Fed's 2% target. According to the CME FedWatch Tool, traders currently price in a 69% chance of a Fed hold and a 31% chance of a rate hike in September. The Federal Reserve's July meeting minutes showed that many officials indicated they could back a hike if inflation fails to improve, with higher rates typically negative for bullion which carries no interest. US gold futures for December delivery rose 0.6% to $4,569.80, with other precious metals gaining ground as well. Among other metals, spot silver gained 0.2% to $67.07 per ounce, platinum dropped 1.3% to $1,802.29, and palladium slid 0.2% to $1,328.06. As per Kotak Securities, Chainwala explained that the hawkish FOMC minutes have complicated the picture, with several officials open to further tightening if inflation stays sticky, a stance that could cap gains if yields or the dollar rebound.
On the technical front, Renisha Chainani, Chief Research Officer at Augmont, said that the precious metal has broken out of its $4,340–$4,440 range (₹153,000-156,000) and reached its $4,500 target (₹158,500), with $4,600 (₹162,000) now next in sight. Despite the recent pullback, gold has largely stayed above the crucial $4,000-per-ounce support level in recent weeks, with buyers increasingly stepping in during price declines following a war-led sell-off that pushed the metal into bear-market territory in June. However, gold remains about 15% below its level before the US-Iran conflict began in late February. As per Kotak Securities, Chainwala noted that continued central bank buying, ETF inflows and any renewed yield softness would preserve the upside bias, while crude holding near multi-week highs on the West Asia standoff adds to the inflation debate, raising the odds of a hawkish Fed stance. The $4,400 level represents strong support, with the precious metal's non-yielding nature making it attractive during periods of monetary policy uncertainty.
