Gold and silver have climbed to their highest level in two months, with both metals jumping over 3% on Wednesday after the U.S. Treasury announced a doubling of its long-end liquidity support buyback sizes, according to The Financial Express. The move was part of a broader Treasury effort to ease pressure in the bond market, which had seen a sustained sell-off in longer-dated government debt.
The announcement, effective September 9, 2026, and lasting through November 4, 2026, will increase the maximum size of each buyback operation from $2 billion to at least $4 billion. Treasury Secretary Scott Bessent called the buyback program a crucial tool for managing market dislocations and supporting liquidity, as reported by The Financial Express. The decision coincided with a $16 billion auction of new 20-year bonds, which put heightened attention on demand for longer-dated debt.
Bond yields fall, precious metals rise
Following the Treasury's announcement, yields on U.S. government bonds fell across the curve. The yield on the 10-year Treasury note dropped to 4.65% on Wednesday after testing 20-month highs of 4.75% in the previous session, according to The Financial Express. The 30-year rate declined 9 basis points to 5.19%. Lower bond yields typically support non-yielding assets like gold and silver, as the opportunity cost of holding them decreases.
Gold currently trades above $4,473, and silver is above $65, with both gaining over 3% in Wednesday's trade, The Financial Express reported. The rally in precious metals came as investors awaited the release of the U.S. Federal Reserve's FOMC meeting minutes.
The Financial Express noted that the Treasury's move is in line with efforts to limit the surge in long-dated yields amid concerns over AI-related debt issuance, higher deficit spending, and risks of elevated inflation.
Bitcoin and gold recover from earlier slump
Bitcoin and gold also saw strong gains this week, recovering from earlier declines. According to reports from the Los Angeles Times and The New Indian Express, bitcoin had dropped from a January high of around $95,000 to below $60,000 at the end of June, as investors shied away from speculative assets and crypto supporters worried about a lack of progress on regulation. On Friday, bitcoin rose above $77,000, marking a sharp turnaround.
Gold followed a similar trajectory, hitting a high above $5,300 in January before dropping to around $4,000 in June as rising rates made interest-bearing investments more attractive. Gold rose to $4,661 on Friday, according to both outlets.
The first jolt came Wednesday when the Treasury Department announced plans to significantly increase its buybacks of long-term Treasurys. On the same day, President Donald Trump, who made about $1.2 billion last year from various crypto holdings, urged Congress to move quickly on crypto legislation. There was an almost immediate reaction, including a dollar sell-off and a jump in gold and bitcoin as investors moved toward alternative assets.
Washington's crypto push
The White House and regulators took steps this week to advance a pro-crypto agenda. President Trump held a crypto conference at the White House and called on Congress to pass the crypto-friendly Clarity Act, according to the Los Angeles Times and The New Indian Express. Commodity Futures Trading Commission Chair Mike Selig vowed to "use every tool available" to advance Trump's agenda, and a CFTC meeting on Thursday examined ways the agency could ease crypto rules. A day earlier, other regulators proposed rules making it easier for crypto companies and projects to raise money from the public.
Since taking office, Trump has pushed policies friendly to the crypto industry and reversed a Biden administration regulatory crackdown, as reported by both outlets.
Market dynamics fuel the rally
The rally in bitcoin was partly driven by market mechanics. Bitcoin had been stuck between $62,000 and $67,000 for weeks, and when it surged, investors who had shorted the cryptocurrency were forced to close their positions, amplifying the upward move. According to data from CoinGlass, more than $4 billion in bearish crypto positions were liquidated during the rally, as reported by the Los Angeles Times and The New Indian Express.
Analysts quoted in the reports described the week's events as a "debasement trade," in which investors moved away from the dollar and U.S. bonds toward assets perceived as stores of value. The Treasury's intervention, while aimed at calming bond markets, also raised questions about whether the government is trying to push borrowing costs lower despite inflationary pressures, potentially undermining the dollar's appeal.
The national debt surpassed $40 trillion on the same day as the Treasury's actions, according to both outlets, adding to concerns about fiscal sustainability. The debt reached $39 trillion in March and $38 trillion in October. Conflict in Iran and soaring energy prices are also causing anxiety over inflation, further supporting demand for gold and bitcoin as hedges.
Outlook
While the rally has been sharp, its sustainability remains uncertain. The Treasury's buyback expansion is a temporary measure, and market participants will be watching upcoming economic data and Federal Reserve policy signals. The Financial Express noted that investors are awaiting the FOMC meeting minutes, which could provide clues about the path of interest rates. If bond yields continue to trend lower, gold and silver could see further gains, but any reversal in Treasury policy or a shift in investor sentiment could quickly change the picture.