Gold prices pulled back from a two-month high on Thursday as traders booked profits following a sharp rally. The retreat came a day after the metal surged more than 4% on a surprise US Treasury announcement that it would significantly increase buybacks of long-dated government bonds, a move that weighed on the dollar and pushed Treasury yields lower. Spot gold fell 0.7% to $4,487.63 per ounce, having touched $4,525.79 on Wednesday, its highest level since June 2.
What drove the rally and the pullback
The US Treasury said it would at least double the size of its liquidity-support buyback operations for securities with maturities between 10 and 30 years. The announcement, intended to ease borrowing costs after yields hit multi-decade highs, reduced the opportunity cost of holding non-yielding assets such as gold. Just hours later, the Treasury revealed that total US public debt had crossed $40 trillion for the first time. The combination of lower yields and a weaker dollar propelled gold to a fresh two-month peak.
However, the gains proved short-lived. Profit-taking emerged on Thursday, pulling the spot price back below $4,500. In the domestic market, gold on the Multi Commodity Exchange (MCX) edged up slightly to ₹1,58,300 per 10 grams.
Analysts: Pullback is consolidation, not reversal
Kaynat Chainwala, AVP - Commodity Research at Kotak Securities, said the retreat below $4,500 looks like a period of consolidation rather than the end of the broader bullish trend. She identified $4,400 as a strong support level on the downside. Chainwala noted that the rally was driven by falling long-term Treasury yields after Washington’s buyback plan eased fiscal supply concerns, reduced gold’s opportunity cost and weakened the dollar.
However, she cautioned that the hawkish tone of the Federal Open Market Committee (FOMC) minutes complicates the picture. Several officials indicated they are open to further tightening if inflation remains sticky, a stance that could limit gains if yields or the dollar rebound. Chainwala added that continued central bank buying, exchange-traded fund (ETF) inflows and any renewed softness in yields would preserve the upside bias. She also pointed to crude oil holding near multi-week highs on the West Asia standoff, which adds to the inflation debate and raises the odds of a hawkish Fed stance. With Chair Warsh offering little forward guidance, his speech at Jackson Hole becomes the key factor for gold’s near-term direction.
Technical outlook: next target in sight
Renisha Chainani, Chief Research Officer at Augmont, provided a technical perspective. She said the precious metal has broken out of its $4,340–$4,440 range (₹153,000–₹156,000 on MCX) and reached its $4,500 target (₹158,500). The next target on the upside is $4,600 (₹162,000).
Key takeaways
- Gold fell 0.7% to $4,487.63 after hitting a two-month high of $4,525.79 on Wednesday.
- The US Treasury’s increased bond buybacks weakened the dollar and lowered yields, boosting gold, but profit-taking followed.
- Analysts view the pullback as consolidation, with $4,400 as key support; the broader uptrend remains intact.
- Hawkish Fed minutes, crude oil prices and the Jackson Hole speech are short-term uncertainties for gold.
Common questions
Why did gold prices fall on Thursday?
Gold declined as investors locked in profits after the metal surged to a two-month high. The rally was driven by a US Treasury bond buyback announcement that lowered yields and weakened the dollar. The pullback was not seen as a reversal but as a consolidation within an uptrend.
What is the support level for gold?
According to analysts, $4,400 per ounce is a strong support level. On the upside, the next target is $4,600 after the metal broke out of its recent range.
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