Gold bulls defy US yield spike as Treasury buyback nears
Gold (XAU/USD) rises over 1% on Wednesday, even as the US Dollar (USD) trims some of its earlier losses, after the US Treasury Department announced a bond buyback for the September 10 auction of 10- and 20-year instruments.
Gold prices rise over 1% on Wednesday, defying a spike in US yields, as the Treasury Department prepares to buy back bonds for a September 10 auction. The yellow metal is trading near $4,400, with traders awaiting US inflation data and a potential rate hike at the September 15-16 Federal Reserve meeting. The Treasury plans to purchase up to $6 billion in securities maturing between 10-20 years, aiming to curb the rise in long-term bond yields.
Gold has been rallying off support near the 100-day Simple Moving Average (SMA) and is now testing the $4,425 resistance level. If it breaks higher, the next target would be the 200-day SMA at $4,537. If prices fall below $4,400, the 100-day SMA at $4,261 could provide support. Gold has historically been seen as a safe-haven asset and a hedge against inflation and currency depreciation.
Central banks, particularly in emerging economies, have been increasing their gold holdings as a diversification strategy.
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