Gold hovers near early-June high on lower bond yields

Gold prices flirted with a two-month high on Thursday following an unexpected move by the US Treasury, which aimed to buoy yields and weaken the dollar. The precious metal traded around $4,512.19 per ounce, maintaining its highest point since June 2 at $4,525.79 earlier in the day. A surge of over 4% occurred on Wednesday. US gold futures for December delivery saw a 0.6% increase, reaching $4,569.80.

Treasury yields declined, with investors amassing demand following the Treasury's decision to double liquidity support buyback operations for longer-dated notes and bonds. The US dollar remained relatively stable, making metal prices more affordable for international buyers. The federal government's debt recently surpassed the $40 trillion mark for the first time, according to the Treasury Department, raising concerns about potential fiscal turmoil due to soaring expenses for social safety-net programs and interest payments outpacing revenues from tax cuts.

Inflation concerns intensified during the Federal Reserve's meeting last month, with several policymakers prepared to raise interest rates and many believing a borrowing cost hike would be necessary if inflation fails to fall to the central bank's 2% target, as revealed by the meeting's minutes on Wednesday. Traders are anticipating a 67.3% probability that the Fed will maintain rates and a 32.7% chance of a rate increase in September, based on the CME FedWatch Tool.

However, gold is anticipated to face a weekly decline as investors exit their inflation-fuelled investments. Silver saw a minor gain of 0.2% to $67.06 per ounce, while platinum dropped by 0.4% to $1,816.78, and palladium increased by 0.3% to $1,339.05.