Gold surges over 3% as US Treasury announcement hurts yields, dollar
GLD•Gold jumps to highest since June 4
Gold surged over 3% to its highest in over two and a half months on Wednesday after a surprise liquidity support announcement by the U.S. Treasury knocked down bond yields and the dollar ahead of the release of the Federal Reserve's July meeting minutes.
Spot gold XAU= climbed 3.5% to $4,486.88 per ounce by 10:35 a.m. EDT (1435 GMT) after touching its highest level since June 4 at $4,491.16 earlier in the session. U.S. gold futures GCcv1 increased 2.8% to $4,546.10.
On the technical front, spot gold broke above its 100-day moving average of around $4,381.
Fed minutes due as rate expectations hold steady
Expectations that the Fed will hold rates steady at its September 15-16 meeting stand at 65%, according to CME Group's FedWatch Tool, after recent weak U.S. economic data dampened bets for a hike.
The U.S. central bank is scheduled to release the minutes of its last policy meeting at 1800 GMT.
Among other metals, spot silver XAG= rallied 3.69% to $65.64 per ounce, platinum XPT= rose nearly 4% to $1,779.89 and palladium XPD= advanced 2.8% to $1,326.13.
Treasury buyback move weighs on yields and dollar
"This was totally unexpected. Very bullish for gold due to lower yields on longer-dated Treasuries and as it may help to bring the dollar lower," said Robert Gottlieb, an industry expert and former head of precious metals at Koch Supply and Trading.
The U.S. dollar index .DXY fell 0.8%, making dollar-priced gold less expensive for holders of other currencies.
Yields on 30-year U.S. Treasuries fell sharply on Wednesday from around their highest level in 19 years after the U.S. Treasury Department said it would double the size of liquidity support buyback operations for longer-dated bonds.
