Gold hovers near early-June high on lower bond yields
GLD•Gold near two-month high after Treasury support announcement
Aug. 20 (Reuters) - Gold hovered near its highest level in more than two months on Thursday after a surprise liquidity support announcement by the U.S. Treasury pushed yields and the dollar lower.
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Spot gold XAU= was little changed at $4,512.19 per ounce, as of 0031 GMT, after hitting its highest level since June 2 at $4,525.79 earlier in the day. Prices jumped more than 4% on Wednesday.
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U.S. gold futures GCcv1 for December delivery rose 0.6% to $4,569.80.
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Yields on long-dated U.S. Treasuries fell, with the increased demand following an announcement that the Treasury Department would double the size of liquidity support buyback operations for longer-dated notes and bonds. US/
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The U.S. dollar remained subdued, making greenback-priced metals less expensive for buyers holding other currencies. USD/
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Total U.S. debt has topped $40 trillion for the first time, the Treasury Department said on Wednesday, 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.
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Concern about inflation deepened at the Federal Reserve's meeting last month, with "several" policymakers ready to raise interest rates and "many" saying a hike in borrowing costs would be needed if inflation does not decline to the U.S. central bank's 2% target, the minutes of the session showed on Wednesday.
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Traders are pricing in a 67.3% chance that the Fed will keep rates unchanged and a 32.7% chance of a rate increase in September, according to the CME FedWatch Tool.
