Is the familiar gold bull market back? The U.S. Treasury to repurchase long-term bonds, $4,500 may become the starting point for a new surge

According to Zhitong Finance APP, after the US Treasury unexpectedly took action to curb the rise in long-term borrowing costs, spot and futures gold prices maintained their largest gains in six months. During early Asian trading on Thursday, spot gold remained steadily above the key $4,500 per ounce level, following a wild rally of over 4% the previous day. This surge had bullish gold investors exclaiming, "The familiar bull market feeling from half a year ago has finally returned." The US Treasury's surprise announcement to ramp up long-term Treasury buybacks sent a strong signal that it intends to lower benchmark borrowing costs after 10-year and longer-maturity yields surged to multi-decade highs.

The US Treasury stated that it would "at least double" the size of its liquidity-supportive buyback operations for Treasury securities with maturities of 10 to 30 years. Just hours later, Treasury Secretary Yellen revealed that total US public debt had surpassed $40 trillion for the first time; this figure has grown by one-third in less than five years.

This move means that the authorities will provide stronger support for the US Treasury market. Coupled with a series of weak economic data and inflation trends, which have cooled expectations for further Fed rate hikes this year, it may significantly contribute to a loosening of global financial conditions and thus markedly lower the opportunity cost of holding gold. As shown in the chart above, after the Treasury announced the buyback policy, gold broke key levels—currently trading near its 200-day moving average.

From the perspective of Wall Street financial giants such as Bank of America and Deutsche Bank, gold is highly likely entering a new upward phase in a long-term structural bull market. However, the sharp single-day rally alone does not signal a renewed straight-line surge in the short term. Should the Middle East’s geopolitical tensions spiral out of control, leading to intense energy-driven inflation that forces the Fed into consecutive rate hikes, with real yields rising again, gold could still retrace toward the $3,900 low.

Wall Street’s nearly unanimous long-term bullish outlook for gold fundamentally points to a singular structural narrative: persistent expansion of government fiscal deficits, mounting interest expenditures around $1.4 trillion, and an AI-driven tech bond issuance frenzy are all vying for long-duration capital, pushing up the term premium. When yields rise to levels that threaten fiscal sustainability and risk assets, policy authorities are forced to intervene to suppress financing costs, making gold an ideal asset to hedge against the negative sovereign monetary and bond cycle of "bond value erosion—policy intervention—the decline in the dollar's real purchasing power."

Treasury's Surprise Move: Long-Term Bond Buybacks Inject Liquidity into the US Treasury Market

Gold futures surged on Wednesday, reaching their highest levels in nearly three months. After the US Treasury unexpectedly injected liquidity and announced plans to at least double long-term buyback amounts, both US Treasuries and the dollar dropped. The 30-year US Treasury yield fell by 9 basis points to 5.19%, marking the sharpest single-day decline since October last year. The 10-year yield dropped to 4.65%, and the dollar index fell 0.8%, making dollar-priced gold cheaper for holders of other currencies.

In the previous trading day, concerns about the US fiscal deficit, inflation, and large-scale borrowing by AI firms had driven the 30-year Treasury yield to its highest in 19 years.

TD Securities noted in a recent research report that the Treasury's announcement to increase liquidity-supportive buybacks "injected new vitality" into the precious metals market. The firm wrote that with the Treasury providing liquidity support, the Fed showing a willingness to temporarily tolerate energy shocks, and the stagflation narrative heating up, "gold investment flows could recover quickly; all these factors should ultimately push real rates lower."

Saxo Bank’s senior commodities strategist Ole Hansen noted in a report that although the Treasury’s move to raise the maximum buyback size from $2 billion to at least $4 billion per operation appears trivial compared with the federal government’s roughly $40 trillion in debt, it signals an official intention to ramp up support for the US Treasury market and ultimately means looser financial conditions—a bullish backdrop for gold.

Hansen stated that the more these measures are perceived by the market as distorting regular bond pricing, the higher the probability the dollar will weaken, which will further support the gold bull market.

Easing Expectations Overwhelm Hawkish Fed Minutes, Supporting Precious Metals’ Rally

However, inflationary pressures driven by energy prices may cap further gains in gold. Oil prices continue to rise due to the dim prospects for a peace deal between the US and Iran over the Strait of Hormuz, and escalating tensions between the United Arab Emirates and Iran have further heightened Middle Eastern risks.

The Fed’s July meeting minutes released on Wednesday showed that more officials favored another rate hike than the three who formally dissented, and some noted they could support further hikes if inflation fails to improve. Higher rates typically weigh on non-yielding gold.

But precious metals markets indicate that easing expectations are clearly overpowering the hawkish Fed minutes. Long-end yields and the dollar fell in tandem, lowering the opportunity cost of holding non-yielding gold. This pushed gold futures to their highest settlement since May, with spot gold remaining firmly above $4,500 per ounce.

Although the Fed minutes indicate more FOMC members may back rate hikes, the market is more focused on the Treasury’s liquidity support driving real rates down, weakening the dollar, and reinforcing the stagflation trade.

As of 7:21 a.m. Singapore time, spot gold was up 0.1% at $4,520.05 per ounce; silver was up 0.1% at $67.01 per ounce. Platinum and palladium also posted small advances. The Bloomberg Dollar Spot Index was flat, after dropping 0.8% in the prior session.

The Treasury increased the maximum size per long-term bond buyback from $2 billion to at least $4 billion, prompting the 30-year yield to quickly drop 9 basis points to 5.19% in a single session and the dollar index to decline 0.8%. Gold quickly rebounded close to $4,500 per ounce. These asset price moves also reveal the current key gold pricing mechanism: the market is not just betting on rate cuts, but on the "financial stability put" the US government may employ given $40 trillion in debt and out-of-control long-end yields.

However, the Treasury’s buyback move only improves the liquidity of older bonds, and does not eliminate the fiscal deficit or reduce net debt issuance. Its deeper positive for gold is not a one-off liquidity injection but amplification of expectations for fiscal dominance, dollar dilution, and future financial repression. It is too early to claim a new relentless gold rally solely based on a single day's surge.

Moreover, investors must remain wary of the risk that escalating Middle East tensions drive oil prices sharply higher and spark a rebound in inflation expectations: if energy shocks force the Fed to hike rates, real yields may climb again, testing the sustainability of gold’s breakout.

Gold Reclaims $4,500, Wall Street Targets Densely Clustered from $4,900 to $6,000

The Bank of America strategist team led by Hartnett, dubbed "Wall Street’s most accurate strategist," argued "going long gold is the best trade currently." This aligns with Deutsche Bank’s assertion that "gold is in an explosive rally phase," as well as other Wall Street majors' bullish logic. At heart, all of these strategies point to the same structural investment theme: ever-growing US government debt, $1.4 trillion in interest payments, and an AI corporate bond issuance boom are competing for long-term capital, boosting the term premium. If yields rise enough to threaten fiscal sustainability and risk assets, policymakers must again seek to lower financing costs, making gold the asset to hedge against the cycle of "bond value loss—policy action—declining real value of the dollar."

The demand side for gold is also undergoing a structural change. According to Deutsche Bank statistics, gold ETF net inflows have reached 1.5 million ounces in the past 30 days, with holdings up about 4 million ounces so far this year. Central bank gold purchases totaled $38.88 billion in Q1 2026, with much of the official buying not fully disclosed. Unlike price-sensitive jewelry demand, diversification by central banks and strategic ETF allocations are less elastic in response to price, meaning record-high gold prices do not necessarily trigger a collapse in demand.

Wall Street’s long-term gold price targets are "aligned on direction, diverging in range": Deutsche Bank’s end-2024 target is $4,700–$5,100; Goldman Sachs, even after a more hawkish rate scenario, maintains a year-end target of $4,900; BofA’s bullish 2026 target stands at $5,000; Morgan Stanley and UBS expect gold to rise to $5,200 in the second half or in the next 12 months, respectively; and JPMorgan forecasts an average price of $6,000 by Q4 2026. From the $4,500 base, those targets represent roughly 4% to 33% upside, with the main differences stemming not from central bank buying but from Fed rate hike paths, ETF inflow speeds, and the dollar’s real yield trajectory.

Gold appears to have all the macro and liquidity ingredients in place for a new upward cycle, but the $4,500 level and the 200-day moving average mark a trend-confirmation zone, not a place to dismiss volatility or blindly chase gains. If the Treasury keeps yields suppressed, the dollar remains weak, and ETFs continue to see net inflows, gold’s next phase could quickly touch Deutsche Bank’s target zone of $4,700–$5,100. Should fiscal credibility deteriorate or funds rotate significantly from Treasuries into gold, $5,200–$6,000 could become a target for the next major rally. Conversely, if the Middle East situation spirals out of control, sharp energy inflation forces a renewed Fed hiking cycle, and real yields climb, gold could still retreat towards $4,400, or even test the pressure scenario at $3,700–$3,800 as projected by Deutsche Bank.