prices spiked on Wednesday, reflecting a steep downturn in U.S. government bond yields after the Treasury Department laid out plans to at least double the size of its buyback operations for long-term notes and bonds.
While the Treasury Department said in a statement that it was not looking to use buyback operations to “mitigate episodes of acute market stress,” such actions have been employed to shore up bond market liquidity.
Undoubtedly, Bullion sank on Tuesday after the yield on briefly reached an almost two-decade peak and remained close to their highest levels since early 2025.
Higher yields can hurt gold because bonds become more attractive when they offer better returns, while holding bullion provides no interest income. That raises the opportunity cost of owning gold and can encourage investors to shift money toward fixed-income assets.
Meanwhile, Oil prices have also risen as the standoff in the Middle East continues, adding another source of pressure on the yellow metal. Higher energy prices can feed directly into inflation, which could make the Fed more reluctant to lower borrowing costs or increase the chances that rates remain elevated for longer.
Undoubtedly, the outlook for oil remains closely tied to the status of the Strait of Hormuz. About one-fifth of global oil and liquefied natural gas flows passed through the waterway before the start of the Iran war in late February, making any prolonged disruption a major risk for elevated energy-driven inflation.
I observe that despite a bumpy move, after testing the key support at the 200 EMA ($4,379), gold futures experienced a sharp bounce back, and tested a fresh high on Wednesday at $4,557.30, after testing the day’s low at $4,378.15, trading at $4,552.15, provide a good opportunity to create a short position, as this rally could see an equally sharp reversal soon the FOMC minutes are released today.
At the same time, the United Arab Emirates — Tehran’s second-largest commercial partner — announced it is suspending all trade with Iran “until further notice” after two ballistic missiles “targeting maritime navigation” fell into the sea, according to the UAE Foreign Ministry. Iran denied firing the missiles.
On the other hand, NATO said today that it is prepared to “address any threat” in response to reports that Iran is considering attacking US military targets in Europe if President Donald Trump ramps up the war.
In March, four suspected Iranian ballistic munitions heading toward Turkey were neutralized by NATO defenses. Iran denied at the time that it launched the missiles. Cyprus was also targeted by drone attacks in March.
The Financial Times reported on Wednesday that Iran has weighed attacking US military targets in Europe should Trump escalate the war, citing people close to the regime.
In response, the NATO official said the military alliance is “prepared to address any threat and will always do what is necessary to defend all allies.”
However, Iran’s parliament speaker and chief negotiator Mohammad Bagher Ghalibaf says the US is seeking an “honourable exit” from the Middle East and touts a “new regional order”.
I conclude that such a scenario confirms the re-escalation of the US-Iran conflict has reached a point of no return to a normalized world, while it has reached its 173rd day today, resulting in a precarious situation globally due to its denting impact on the global economy.
I find that a move by gold futures, after the announcement of FOMC minutes, as a pull back from here could accelerate the selling spree that could continue to influence next two trading sessions, as the weekly closing will provide further directional moves, as after the FOMC minutes within next a few hours, investors’ attention will shift to Fed Chair Kevin Warsh’s remarks at the Jackson Hole symposium next week.
I find that a move by gold futures, after the announcement of FOMC minutes, as a pull back from here could accelerate the selling spree that could continue to influence next two trading sessions, as the weekly closing will provide further directional moves, as after the FOMC minutes within next a few hours, investors’ attention will shift to Fed Chair Kevin Warsh’s remarks at the Jackson Hole symposium next week.
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Disclaimer: Readers are advised to take any position in gold at their own risk, as this analysis is based solely on observations.
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