GOLD HOLDS ABOVE $4,600 AS US TREASURY BUYBACK PLANS WEIGH ON USD
Gold climbed to around $4,625 during Monday’s early Asian session, reaching its highest level since May 15 as the US Dollar weakened following plans to expand US Treasury bond buybacks.
US Treasury Secretary Scott Bessent said the government could increase bond buybacks beyond $4 billion, following the announcement of plans to double purchases of longer-dated securities. The development has contributed to lower Treasury yields and a softer US Dollar, providing support to USD-denominated Gold.
TD Securities noted that Treasury support for longer-dated debt could remain supportive of Gold and the broader precious metals market. The bank also highlighted the role of the weaker dollar in the recent move higher. This is an institutional assessment rather than a confirmed market outcome.
At the same time, higher energy prices could keep inflation expectations and Federal Reserve policy in focus. If inflation concerns contribute to expectations for higher interest rates, this could limit demand for non-yielding Gold.
From a technical perspective, XAU/USD maintains a constructive near-term setup above the 100-day Simple Moving Average and Bollinger middle band. However, the 14-period Relative Strength Index stands at 70.81, indicating overbought conditions and suggesting that upside momentum may be increasingly stretched.
The upper Bollinger Band near $4,675.80 is the nearest technical resistance. On the downside, the current price area provides an initial reference, followed by the 100-day SMA at $4,379.39 and the Bollinger middle band at $4,305.50. A deeper correction could bring the lower Bollinger Band near $3,935.20 into focus.
For market participants, the key factors remain the $4,600 area, Treasury buyback developments, US Dollar movements, Federal Reserve expectations and the $4,675.80 technical resistance. These factors may provide further context for the near-term direction of XAU/USD.
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