Precious metals surge after surprise US Treasury announcement to support longer-dated securities
The US Treasury announced today that it will at least double the size of its liquidity-support buyback operations for longer-dated Treasury securities, increasing the maximum purchase from $2 billion to at least $4 billion per operation. The change will apply beginning September 9, 2026.
The announcement came at a time when long-dated Treasury yields have been under heavy upward pressure. The US 30-year bond yield, for example, recently rose to the highest level since 2007 and it attracted lots of market attention. The bond market has been tightening financial conditions and this move from the US Treasury kind of works in reverse.
The reaction in the markets was an easing in financial conditions. In the big picture, this could be a dangerous move, as it could prompt markets to expect more “intervention” in the future, at the expense of higher inflation (all else being equal). This is especially negative for the US dollar and positive for precious metals.
Chart: Gold (blue), Silver (red), Platinum (green) 5-miunte timeframe
The US Treasury announcement brought down real yields, which are the ultimate driver of precious metals. This is because gold is a safe haven asset that competes with another safe haven asset: US Treasuries. This happens because higher yields increase the opportunity cost of holding non-yielding assets like gold.
The real yield is the difference between nominal Treasury yield and inflation expectations. When inflation expectations rise faster than nominal yields or nominal yields fall faster than inflation expectations, real yields fall and that’s positive for gold. Conversely, when inflation expectations fall faster than nominal yields or nominal yields rise faster than inflation expectations, real yields rise and that’s negative for gold.
In our case, nominal yields fell and inflation expectations rose a little, bringing down real yields.
The tight inverse correlation with real yields has weakened since 2024 but it hasn’t disappeared. Real yields are still the main driver of gold and precious metals in general, but the magnitude of change in prices compared to changes in real yields has changed. Since 2022, gold tended to weaken less when real yields rose and rallied more when real yields fell.
There have been different takes explaining this behaviour ranging from countries diversifying more after the US seized Russian assets following the Ukraine war to Federal Reserve independence and fiscal profligacy.
Real yields are mainly influenced by Federal Reserve policy expectations. Depending on the economic context, when the Fed adopts a tightening bias, inflation expectations generally fall and nominal yields rise. This in turn increases real yields and puts pressure on gold. Conversely, if the Fed adopts an easing bias, inflation expectations rise and nominal yields fall, leading to a fall in real yields and boosting gold prices.
Let’s take the US-Iran war in 2026 as an example because it shows the changes in Federal Reserve bias, interest rates pricing and inflation expectations all at once.
Below you can see the tight correlation of gold (blue) and the US10y real yield (red – inverted) during the US-Iran war. The US economic context was positive with solid growth and improving labour market, the only negative was that inflation had been picking up after the rate cuts delivered in 2025, so there’s been focus on inflation. The war triggered a huge spike in oil prices which surpassed the $100 level on many occasions. This led to a hawkish repricing in interest rate expectations and increased real yields, therefore pressuring gold.
At the end of March and the beginning of April, we started to get positive reports for a potential ceasefire to work for a peace deal. The ceasefire was eventually announced by Trump on Truth Social and from that point onwards, the markets started to reprice inflation and interest rates expectations, leading to a drop in real yields and a rally in gold.
This trend lasted for about a month and reversed after US economic data and Fed members comments pointed to a potential change in the Federal Reserve easing bias. The markets of course moved before the actual FOMC meeting of June and the moves then accelerated after the Fed effectively adopted a tightening bias by projecting a rate hike before year-end. This development is better captured by looking at the internals of real yield, that is the nominal US 10y yield and inflation expectations via the US 10y breakeven rate.
In the first part of the chart, nominal yield (orange) rose faster than breakeven rate (green) leading to an increase in real yield. When we got the ceasefire and the peace deal negotiations, nominal yield fell and stayed mostly rangebound, while breakeven continued to climb as oil prices consolidated at higher levels awaiting a peace deal. This has led to a fall in real yield.
In the third and last part, we got both a peace deal and a change in Federal Reserve bias. Oil prices cratered quickly to pre-war levels and the huge selloff caused breakeven rate to fall very fast. The nominal yield, on the other hand, stayed mostly rangebound with a bullish tilt because the easing in inflation concerns was putting pressure on nominal yield, but the hawkish Fed was limiting the downside. This in turn caused real yield to increase and put pressure on gold.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
FX初心者には必須 無料のうちにGET！
