U.S. Treasury Expands Long-Term Treasury Buybacks, Providing Potential Support for Gold

Summary:

The U.S. Treasury has announced an expansion of its liquidity-support buyback operations for long-term nominal Treasury securities. From the perspective of the gold market, the expansion of long-term Treasury buybacks could provide a potential short-term bullish catalyst. If the buyback operations effectively improve demand for longer-dated U.S. Treasuries and push 10-year and 30-year Treasury yields lower, declining real yields would reduce the opportunity cost of holding gold and potentially provide support for gold prices.

SELL XAUUSD

EXP

TRADING

4483.76

Entry Price

4050.00

4650.00

4522.29 +188.06 +4.34%

0.0

Pips

Flat

4050.00

Exit Price

4483.76

Entry Price

4650.00

Fundamental

The U.S. Treasury has announced an expansion of its long-term nominal Treasury buyback operations, primarily covering the 10- to 20-year and 20- to 30-year maturity segments. The maximum size of each operation will be increased from the previous $2 billion to at least $4 billion. The adjustment will take effect on September 9 and remain in place for the remainder of the current quarterly refinancing period.

From a policy perspective, the move does not represent traditional monetary easing. Instead, it is a market microstructure adjustment aimed at improving liquidity in the long-term Treasury market. By increasing buybacks of less actively traded long-term Treasury securities, the Treasury seeks to enhance market liquidity and provide dealers and other market participants with a more stable trading environment.

Nevertheless, against the backdrop of heightened pressure in the U.S. long-term bond market, the move still carries broader macro-financial implications. The same applies to gold. When real yields decline, the opportunity cost of holding gold decreases, making it easier for capital to be reallocated toward non-yielding assets such as gold. Conversely, when real yields continue to rise, gold typically faces greater pressure.

Therefore, following the Treasury's expansion of long-term Treasury buybacks, the market should first monitor the direction of long-term Treasury yields.

If the buyback operations improve demand for long-term Treasuries, pushing bond prices higher and yields lower, the transmission mechanism could be:

Expanded long-term Treasury buybacks → Higher Treasury prices → Lower long-term yields → Lower real yields → Lower opportunity cost of holding gold → Support for gold prices.

At the same time, if falling Treasury yields lead to a weaker U.S. dollar, the bullish momentum in gold could be further strengthened.

However, another scenario should not be overlooked. If the market believes that the expanded buyback operations are still insufficient to offset the pressure from the U.S. fiscal deficit, long-term Treasury supply, and rising term premiums, long-term yields could remain elevated. In that case, gold would not automatically rise simply because the Treasury has expanded its buyback operations and could even experience a “buy the rumor, sell the news” reaction.

U.S. Treasury Expands Long-Term Treasury Buybacks, Providing Potential Support for Gold_1

Technical Analysis

Given the supportive fundamental backdrop for gold, the short-term bulls may attempt to test the 200-day moving average at around $4,504. Therefore, we believe the $4,504–$4,520 area is the key zone to watch closely.

Trading Strategy

Direction: Sell

Entry: 4,520

Target: 4,050

Stop Loss: 4,650

Strategy Valid Until: September 18, 2026, 23:55

Support: 4,362, 4,324, 4,310

Resistance: 4,480, 4,504, 4,515

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