Gold price rises, silver slips on Treasury cash-pile buyback signal

Gold prices increased while silver prices declined on Monday, following CNBC's report that Treasury Secretary Scott Bessent may use a $935 billion cash reserve to finance bond buybacks. This move could drive long-term yields down, as reported by two senior Treasury officials. The TGA, or Treasury General Account, currently holds $935 billion, according to Aug.

20 data. Bessent referred to this operation as a "Treasury Twist," a term alluding to the purchase of long-term bonds funded by short-term issuance. Officials were not forthcoming about the specific amount of the TGA that would be utilized. The announcement came after Bessent doubled the long-end buybacks from $2 billion to at least $4 billion.

Gold rose 1.2% to near a four-month high of $4,719 per ounce, while the 10-year Treasury yield dropped as much as four basis points to 4.69%. The 30-year yield also dipped to approximately 5.215%. However, silver prices slipped by around 1%, consolidating below the $70 resistance level. Silver has outperformed gold in August, with a 20% increase this month compared to gold's 15% gain.

Copper saw a modest rise of 0.46% and is trading near its all-time highs. Some analysts, including Blake Gwinn, head of US rate strategy at RBC Capital Markets, expressed skepticism about the Treasury's move, labeling it as a "very slapdash attempt to stem the selloff" and estimating the likelihood of the department actually using the cash at "very, very low."

The upcoming week will be crucial for investors, the Federal Reserve, and the Treasury, as Fed Chair Kevin Warsh delivers his first Jackson Hole speech and July PCE data is released on Wednesday. Economists predict a 3.6% headline and 3.3% core year-over-year inflation rate. The Treasury will closely monitor long-term rates.