Gold: Rally Faces Scrutiny as Buybacks Reshape Yields — BNY Mellon

Spot gold was trading near $4,475.87, after briefly breaking above the $4,500 level. Geoff Yu of BNY Mellon noted in a latest report that gold's rapid rally is facing fresh scrutiny as investors reassess U.S. Treasury buyback operations and their transmission effects on the inflation path.

**Buybacks Reshape Yields, Easing Bond Market Pressure for Now**

The report argues that U.S. Treasury buyback operations have effectively smoothed bond market volatility in the short term, with yield curve pressure released in phases. But this "calm" does not come without a cost—while liquidity is being reinjected into the system, inflation expectations have not been anchored in tandem, and market doubts over fiat currency purchasing power are instead accumulating.

**Alternative Stores of Value Under Pressure**

BNY Mellon notes that after bond market pressure eased, funds did not flow back into traditional safe-haven assets, but instead shifted the contradiction to alternative stores of value such as gold and bitcoin. This implies that the current elevated gold price partly reflects the market pricing in the long-term inflationary consequences of buyback operations in advance, rather than being driven purely by safe-haven demand. According to the bank's analysis, if buyback scale continues to expand, gold's role as an "anti-fiat" asset could be further reinforced, but its price volatility would also become highly tied to the pace of policy operations.

**Outlook: Focus on Policy and Inflation Data**

Market signals show investors are closely watching the scale and frequency of subsequent buyback operations, as well as whether upcoming inflation data can validate the policy assumption of "stable bond market, contained inflation." If inflation indicators surprise to the upside, gold and bitcoin could face a new wave of buying; conversely, if the buyback exit path becomes clear, gold prices could see some pullback of recent gains in the short term.