Gold, as measured by SPDR Gold Shares (NASDAQ:GLD), surged 3% Wednesday after the U.S. Treasury unexpectedly doubled the size of its long-dated bond buybacks, sending yields and the dollar sharply lower.
The move came a day after the 30-year Treasury yield hit its highest level since 2007, hammering rate-sensitive tech stocks as borrowing costs surged.
Wednesday brought a sudden reversal. Treasury said it would double liquidity-support buybacks for 10- to 30-year securities from $2 billion to at least $4 billion per operation.
The 30-year yield fell almost 10 basis points and the dollar sank 0.8%, giving gold a double boost from lower yields and a weaker greenback.
Metals trader Robert Gottlieb called the announcement “totally unexpected” and “very bullish for gold,” according to Reuters.
A Small Buyback Sends a Big Signal
The extra $2 billion per operation is a rounding error in a roughly $31 trillion Treasury market. Traders appear to be pricing the signal instead: that Scott Bessent’s Treasury is willing to lean against disorderly moves in long-term yields.
Joseph Purtell, a rates trader at Neuberger Berman, questioned whether an extra $2 billion per buyback was really worth a nine-basis-point move. Instead, he said the market now sees a "soft line in the sand" for Treasury yields.
The announcement came outside Treasury’s usual quarterly schedule, adding to speculation that officials were responding directly to the bond rout. The timing suggested they “didn’t like what was happening,” strategist John Briggs told the Wall Street Journal.
Bessent’s Yellen Critique Comes Back
In 2024, Bessent accused then-Treasury Secretary Janet Yellen of having “taken control of monetary policy” through Treasury issuance, arguing that changes to the government’s borrowing mix had “eased financial conditions substantially.”
Wednesday’s move was different, but the irony was hard to miss: Bessent had warned that Treasury debt management could move financial conditions. On Wednesday, his own Treasury underscored the point.
Traders Aren’t Declaring Victory
Prediction markets suggest the bond selloff may not be over. Kalshi traders still put 53% odds on the 10-year finishing 2026 at 4.75% or above, and a 34% chance it ends the year at 5% or higher.
Kalshi and Benzinga have an existing data collaboration agreement.
Schiff Says Buy Gold, Sell Bitcoin
Gold bug Peter Schiff argued the Treasury is accepting higher inflation to slow the rise in long-term rates, a trade-off he says has lifted precious metals and Bitcoin alike. Gold and silver will hold and extend their gains, he predicted, but “Bitcoin is a sell.”
Schiff’s call faces an immediate test: Bitcoin (CRYPTO: BTC) was up more than 5% near $68,100 Wednesday, outperforming gold on the day. For now, gold bugs and Bitcoin bulls are trading the same Treasury signal.
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