Gold and Bitcoin Surge on Treasury Bond Market Fight. Scarce Asset Owners Are This Market's Big Winners

Markets are increasingly being shaped by a tug-of-war between inflation, government borrowing, and the enormous pool of financial assets sitting on investors’ balance sheets. That tension became more visible after Treasury Secretary Scott Bessent stepped into the bond market last week, announcing it would at least double its liquidity-support purchases of longer-dated Treasury securities, from $2 billion to $4 billion per operation. 

Now, the possibility of using nearly $1 trillion in Treasury cash to fund those purchases is giving investors another reason to favor scarce assets.

Treasury Just Gave Gold Another Boost

Gold had spent much of July stuck around $4,000 an ounce, with spot prices closing July 31 at $4,042.67. Then the bond market changed the story.

Gold was around $4,424 before Bessent’s Aug. 19 announcement and has climbed to roughly $4,730 today, a gain of almost 7%.

The catalyst was Treasury signaling it is willing to lean against rising long-term yields. The announcement raised the maximum purchase in both the 10-to-20-year and 20-to-30-year sectors to at least $4 billion, beginning Sept. 9. That’s key because lower long-term yields reduce the opportunity cost of owning gold, which produces no interest income.