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Gold Rises Above $4,500: What Are the Markets Trying to Understand?

Gold prices surpassed the $4,500 level on August 19th, reaching a two-month high. The price of gold per ounce rose as high as $4,557 during the day before stabilizing around $4,522, with a daily increase of 4.35%.

The direct trigger for the rise was the US Treasury Department's decision to expand its long-term bond repurchase program. The department announced it would increase the maximum repurchase amount for 10-20 year and 20-30 year bonds from $2 billion per transaction to a minimum of $4 billion. This move surprised the markets.

The market reaction was swift and clear. The 30-year bond yield, which had reached its highest level in 19 years, fell by approximately 9 basis points to 5.19% after the announcement. The dollar index also lost approximately 0.8% in value. As a non-interest-bearing asset, gold directly benefits from falling bond yields, and the weakening dollar makes its price per ounce more accessible compared to other currencies, forming the fundamental mechanism behind this rise.

TD Securities strategists described the Treasury's move as a "lifeline for metals," while Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated that the combination of falling yields and a weakening dollar has created new momentum for gold. The Treasury's action is seen as an intervention to alleviate the financial tightening created by long-term interest rates reaching their highest levels since 2007.

However, there are questions about the sustainability of this move. On the one hand, central bank demand for gold remains a strong fundamental factor. According to World Gold Council data, central banks purchased 289 tons of gold in the first half of 2026, while 89% of survey participants predicted an increase in global reserves next year.

On the other hand, the Federal Reserve's July 28 meeting minutes revealed that inflation concerns persist and many officials are prepared for interest rate hikes. This suggests that despite the decline in long-term interest rates, short-term rates may remain under upward pressure. Furthermore, while this Treasury intervention risks creating expectations of further "market intervention" and fueling inflation, increasing gold's appeal as a store of value, it could also push the central bank towards a more hawkish stance.

Technically, the $4,500 level is a critical threshold just below gold's 200-day moving average ($4,510). A daily close above this level could be interpreted as a bullish signal for technical investors. While UBS's $5,000 target remains on the table, the impact of the Treasury's expanded repurchase operations, beginning on September 9, on market liquidity and bond yields will be critical in determining gold's direction. For Gate users, gold's sensitivity to both traditional financial conditions and central bank policy responses could serve as an early warning system for cryptocurrency markets in the coming period.

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