Gold surges past $4,700 on Treasury buyback news

Gold prices extended their upward trajectory this week, with futures on the Comex exchange climbing above $4,700 per troy ounce for the first time since May 14, according to trading data. The precious metal has been buoyed by the US Treasury's unexpected announcement of higher buybacks of long-term government bonds, which tends to support gold as a hedge against inflation and currency weakness.

Business Standard reported that gold was trading near $4,700 per ounce on Comex, up $25.70 from the previous close at the time of writing. The report attributed the rise to the Treasury's move, which it said came as a surprise to markets.

Meanwhile, gold for December delivery on Comex had already crossed the $4,600 mark on August 21, the first time since May 29, according to TASS. By August 24, October contracts had risen above $4,700, with trading data showing a gain of 0.77% to $4,713.8 per ounce.

Domestic markets show mixed trading

In India, the Multi Commodity Exchange (MCX) saw a volatile session. Gold futures opened lower at ₹1,62,052 per 10 grams, down ₹386 from the previous close, but recovered to trade at ₹1,63,570, up ₹1,132, according to Business Standard. The session saw a high of ₹1,63,585 and a low of ₹1,62,001.

Silver, on the other hand, showed weakness on the MCX. The September silver contract opened at ₹2,45,597 per kg, down ₹1,000, and was trading at ₹2,46,136, down ₹461 at the time of writing. On Comex, silver also slipped, trading at $69.16 per ounce, down $0.37 from the previous close.

Silver's divergence and market context

While gold has been supported by the bond buyback news, silver's performance has been more subdued. On Comex, silver futures for September delivery were up just 0.57% to $68.49 per troy ounce on August 21, according to TASS, lagging gold's gains. This divergence suggests investors may be favoring gold as a safer bet amid global economic uncertainty.

Silver's weakness could be attributed to its dual role as both a precious and industrial metal. Concerns about global growth and industrial demand may be weighing on the metal, even as gold benefits from safe-haven flows.

The price levels are a significant move for gold, which has been on a steady climb. TASS reported that December gold futures on Comex had earlier crossed the $4,500 mark on August 12, the first time since June 5, indicating a rapid acceleration in the past two weeks.