Gold, silver, miners surge as Treasury doubles buybacks

Gold, silver and miners surged Wednesday after the US Treasury unexpectedly said it would at least double purchases of long-dated government debt, pushing down yields and the dollar and giving precious metals a sharp lift.Spot gold traded around $4,484 an oz. as of 10:25 a.m. ET, up 3.46% from Tuesday’s close, while silver gained 3.33% to about $65.44 an oz. The dollar index dropped 0.78%, while the 10-year Treasury yield declined 1.27% and the 30-year yield fell 1.84%.Gold miners, which have outpaced the underlying metal this month, posted even stronger gains. The VanEck Gold Miners ETF (GDX) jumped 8.8% to about $96.88, Agnico Eagle Mines (TSX: AEM; NYSE: AEM) rose 8.85% to roughly $282.44 and Barrick Mining (NYSE: B; TSX: ABX) advanced 7.66% to $45.33.The rally shows how sensitive precious metals have become to movements at the long end of the Treasury market. Lower yields reduce the opportunity cost of holding non-yielding gold, while a weaker dollar makes the metal cheaper for buyers using other currencies.Treasury steps inThe catalyst came from the Treasury rather than the Federal Reserve. Two weeks after publishing its quarterly buyback schedule, the department said Wednesday it was “increasing, by at least double, the size of liquidity support buyback operations” for securities in the 10- to 30-year sector, Bloomberg reported.The tentative calendar for Sept. 9 through Nov. 4 had indicated purchases of as much as $14 billion. Doubling that amount would imply at least another $14 billion in purchases, with the operations beginning Sept. 9.The move follows mounting pressure at the long end of the Treasury market. A 10-year auction last week drew the highest financing cost for that maturity since 2007, while a 30-year sale the following day cleared at the steepest yield since 2001, according to Bloomberg. Traders were also preparing for a $16-billion auction of new 20-year bonds.The Treasury paid about $85 billion in interest to bondholders days earlier, the largest such payment in Bloomberg’s records.Treasury Secretary Scott Bessent has made clear that he views the 10-year yield as an important measure of his performance.“My job is to be the nation’s top bond salesman, and Treasury yields are a strong barometer for measuring success in this endeavour,” Bessent said last November.He has separately said he wants the 10-year yield to carry a “3” handle, meaning below 4%, Reuters reported this month.Staying powerWhether larger buybacks can keep long-term yields lower remains uncertain. Bloomberg macro strategist Cameron Crise said the additional buying alone is unlikely to reverse long-end selling, although the Treasury’s signal could encourage further short-covering.Jack McIntyre, a portfolio manager at Brandywine Global Investment Management, compared the move with a version of Operation Twist, the Federal Reserve strategy that sought to lower longer-term borrowing costs by altering the maturity profile of its holdings.McIntyre told Bloomberg that a slowing economy or a resolution of the Iran conflict would ultimately be more powerful forces for pulling long-term rates lower.For gold and silver investors, the immediate effect was clearer: Treasury intervention relieved pressure from two of precious metals’ biggest headwinds — elevated long-term yields and a strong dollar — while miners amplified the metals’ gains.(With files from Bloomberg)Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com