The US Treasury's announcement to at least double buyback operations for long-dated government debt, starting in September, has triggered significant market movements, weakening the US Dollar (USD) and supporting both gold and the British Pound [1][2]. Gold (XAU/USD) surged to around $4,625 during early Asian trading hours on Monday, reaching its highest level since May 15, as the buyback plan weighed on the USD and cooled Treasury yields [1]. Bart Melek, global head of commodity strategy at TD Securities, attributed gold's momentum to the drop in the USD, suggesting that if the trend continues, the next target could be $4,700 [1]. Technical analysis indicates gold remains in a bullish near-term bias, trading above key moving averages, though the 14-period Relative Strength Index at 70.81 signals overbought conditions [1].
Similarly, the GBP/USD pair traded with a positive bias around the mid-1.3600s, close to its highest level since February 11, as the weak USD provided a tailwind for the Pound [2]. The fundamental backdrop, including reduced expectations for an immediate Federal Reserve (Fed) rate hike due to cooling price pressures, supports the ongoing uptrend in GBP/USD [2]. However, both articles note that energy-driven inflation and escalating US-Iran tensions could limit further downside for the USD and cap gains for gold and the Pound [1][2]. US Treasury Secretary Scott Bessent is expected to announce what he calls the toughest sanctions in history on Iran, while Iranian officials have threatened to halt oil exports through the Strait of Hormuz if economic pressure continues [1][2].
Analysts at TD Securities believe that Treasury support at the long end may continue to underpin gold, especially as the Fed appears willing to look past higher energy prices, sustaining the current higher trading range [1]. For GBP/USD, the market focus is shifting to the upcoming US Personal Consumption Expenditures (PCE) Price Index release and Fed Chair Kevin Warsh's appearance at the Jackson Hole Symposium, which are expected to provide further cues on the Fed's policy path and influence near-term USD dynamics [2].
Technical levels for gold show immediate resistance at the Bollinger upper band near $4,675.80, with initial support at the current price area [1]. For GBP/USD, a breakout above the 1.3660 supply zone is awaited for further upside, while pullbacks toward 1.3600 are expected to find buying interest and remain limited near 1.3570 support [2].
CONCLUSION
The US Treasury's expanded buyback plans have weakened the USD, driving gold to multi-month highs and supporting the British Pound. However, geopolitical tensions and inflation risks may limit further gains, with upcoming US economic data and Fed commentary likely to shape the next market moves.