By: Rhona O'Connell, Head of Market Analysis
Rhona O'Connell, Head of Market Analysis, EMEA & Asia
Tel: +44 203 580 6115 / mobile +44 7384 833897
24th August 2026
Treasury announcement will not greatly affect bonds, but cheers dollar bears on the return of debasement
Last week’s Outlook: “likely to maintain the recent marginal rise in prices but absent an exogenous shock, unlikely to rise much further near term” Well we got that exogenous shock, last Wednesday. After a period of weeks in which the $4,000 level developed as support, and with geopolitical tensions persisting, sentiment had already been turning in gold’s favour before the Treasury’s Statement last week. The mechanics of the Treasury’s intervention at the long end of the bond markets (which is currently scheduled for a programme of just eight weeks) is a lot less significant than the fact that the markets are viewing this as a reduction in US financial credibility. Bond yields are continuing to rise at the long end, and the Treasury is likely to lose this particular battle. With the cost of financing the deficit continuing to rise there is little fiscal headroom for manoeuvre and as a result of all this the dollar is on the defensive. These different elements combine in favour of gold, for the variety of reasons given above. Technically, though, rising yields are a headwind for gold and it is likely that while we have seen a change of range, gold’s momentum will be impaired by bond activity.
The outlook will continue to depend on geopolitics and financial management. Continued official sector purchases will be supportive, but without a black swan it is hard to see gold regaining the highs of end January, which was ultimately a momentum trade, in the near term. It is possible to see it later next year if the developing rally is steady rather than fraught.
Key long bond yields, long-term and the 5Y-30Y spread; taken literally, 30Y bonds are not underwater, but the 5’s and 10’s are
US 30Y yield, short term
Source: Bloomberg, StoneX
In a note that we published last Friday 21st August (here) we included the following comments:
“The fact that [the doubling of the buyback] programme will, as for now at least, only run for eight weeks (and we don't yet know how many operations there will be) is one of the reasons why the bonds have marched on after their initial fall (in the 14 hours following the Statement was 21 points before equilibrium was restored). Gold’s response is a function of the additional uncertainty that this feeds into the sector because independent bond market experts are pointing to the size of the US debt and suggesting that this action is akin to applying a plaster to an open wound.
US debt exceeded $40Tn for the first time on 18th August (which begs the question whether that level was a trigger for expanding the programme). Buybacks, as clearly shown in the [Treasury] Statement, are a liquidity provider. Debt held by the public (including hedge funds, mutual funds and households) is up $2.45Tn Y/Y, a gain of 8.2%, and these holders are price sensitive. And because the average coupon on many outstanding stocks is below current yields, rolls on maturity will be set at a higher rate, so the cost of funding rises even if the deficit stays stable. This leaves the Treasury in something of a bind as debt management becomes yet more difficult and this has not been lost on the gold market”.
We are continuing to keep an eye on the private credit sector, which is catching increasing interest from the press. The FT has this week has noted that after the global financial crisis, authorities clamped down on “duration mismatch” (banks borrowing short term and lending long. This, incidentally, is effectively what the US Treasury is doing in its expanded buyback programmes that will be underway from 9th September). The FT points out that some of that activity shifted into the private banking sector and the way that this has evolved has brought some life assurance companies onto the scene and suggests that the continued geopolitical issues and persistent inflation mean that a rise in credit defaults may result.
Energy picks up again as President Trump’s latest comments threaten further escalation in the Gulf
Source: Bloomberg, StoneX
On the technical side gold is now above all four key moving averages. Silver is approaching the 200-day ($72) and finding support from the 10-day at $63.7.
Gold has crossed the 200D to the upside (the latter stands at $4,514)
Silver’s moving averages are supportive; 200D lies ahead
Source; Bloomberg, StoneX
The latest CFTC gold figures, for the week to 18th August in a new a period of consolidation on either side of $4,350 (and before the Treasury Statement) , saw a 19t (4%) gain in outright Managed Money longs and a six tonne (18%) increase in shorts. Silver, meanwhile, saw reductions on both sides with longs shedding 68t (2%) and shorts down by 149t (11%), taking the net long up to 1,921t.
Within the ETFs there has been continued buying interest but in keeping with consolidation in price action, the activity was slower than in the previous week. The latest numbers from the World Gold Council run as far as the 14th August; in the preceding week 24t were added, taking the total to 4,114t. In percentage terms Europe was the most active, adding 1% or 15t; North America seven tonnes (0.4%) and Asia, one tonne (0.2t). Subsequent Bloomberg figures (not as comprehensive as WGC) report steady buying last week although there was a touch of profit taking on Wednesday; on the day after the Treasury announcement some 18t (net) were bought for a gain over the period of 29t, implying a year-to-date net creation of 119t. Silver ETFs (Bloomberg numbers) were mixed over the week for a net redemption of 11t – although the on the 19th the net inflow was 93t; closing figures last week were 24,812t, a net loss ytd of 2,009t.
Gold COMEX positioning, Money Managers (t)
Source: CFTC/Blomberg
COMEX Managed Money Gold Longs as % of 1st continuation Open Interest
Source: Bloomberg, StoneX
COMEX Managed Money Silver Positioning (t)
Source: CFTC/Bloomberg, StoneX
COMEX Managed Money Silver Longs as % of 1st continuation Open Interest
Source: Bloomberg, StoneX
The S&P, gold and copper; S&P/gold correlation declining still further, to 0.12 while S&P:Cu correlation is again tighter at 0.53
Gold, silver and copper correlations; silver-gold 0.83 (higher); silver-copper, 0.58 (easier)
Gold:Brent ratio
Gold in key local currencies. Year-to-date, up 14% in Rupee terms, up 7% in US$
Source for above charts; Bloomberg, StoneX
Gold:silver ratio; contracting; this is normal when prices are rising given silver’s higher volatility
Source for above charts: Bloomberg, StoneX
| 24 August 2026 | Previous week | % change | Year-to-date | Range Jan 2024 onwards | Range as % | ||
| Min | Max | ||||||
| Gold (pm LBMA price) | 4,655.48 | 4,415.99 | 5.42% | 7.46% | 3,976.50 | 5,417.21 | 36.23% |
| Silver (LBMA price) | 58.66 | 62.05 | -5.47% | -23.41% | 57.42 | 116.70 | 103.25% |
| Platinum (pm LBMA price) | 1,629.94 | 1,632.90 | -0.18% | -28.41% | 1,552.52 | 2,054.12 | 32.31% |
| Palladium (pm LBMA price) | 1,271.77 | 1,271.28 | 0.04% | -25.94% | 1,171.57 | 2,054.12 | 75.33% |
| S&P 500 | 7,674.37 | 7,785.76 | -1.43% | 12.11% | 4,688.68 | 7,798.99 | 66.34% |
| $:€ | 1.1679 | 1.1570 | 0.94% | -0.34% | 1.0244 | 1.2041 | 17.54% |
Source: Bloomberg, StoneX
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Gold rose in euro terms as well as in U.S. dollar terms, which rules out dollar weakness as the whole explanation. Rhona O'Connell explains what non-dollar gold pricing reveals about the bid that followed the U.S. Treasury buyback announcement.
Yields kneejerk fall post Treasury Statement, but rebounding
The safe haven trade has always resolved into long dated U.S. Treasuries and the dollar, and every crisis this century confirmed it. A fiscal position near 99% of GDP, record federal debt and a growing precious metals bid now give that flow somewhere else to go.
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