The US Treasury ran its second expanded bond buyback in two weeks and still could not hold yields down. The 10-year yield touched 5.23% on Friday, its highest since 2007, and gold closed the week near $4,285 an ounce, down roughly 2% as real yields climbed.
Treasury Secretary Scott Bessent announced another $6 billion buyback of older long-term bonds this week, an operation that retires seasoned debt and replaces it with new issuance. Last week’s buyback briefly pulled yields lower, but they started climbing again within an hour. This week’s operation produced the same pattern: a short dip, then a recovery in yields as traders weighed stronger economic data against hawkish Federal Reserve commentary.
The 30-year yield moved toward 5.45% to 5.49% during the week, levels last seen in 2004. The dollar hit a two-month high. Markets now price an October Fed rate hike at roughly 64% to 70% probability, up sharply from a month ago, after the central bank raised rates in September for the first time in years. New York Fed President John Williams said another hike this year was likely, and Governor Michael Barr spoke of further policy adjustments, commentary that markets read as higher-for-longer regardless of the October outcome.
Real yields are doing the damage
The structure of the yield move matters for what comes next. The 10-year real yield, the inflation-adjusted rate tracked by the Federal Reserve’s DFII10 series, closed at 2.76% on September 23, up 33 basis points from 2.43% on September 8. Breakeven inflation barely moved over the same period, slipping from about 2.37% to 2.35%.
That arithmetic tells you the selloff is not primarily a fiscal panic or an inflation scare. It is a real-rate move, driven by a stronger economy and a more hawkish Fed. For gold, that is the conventional bearish channel: a zero-yield asset loses ground when inflation-adjusted bond returns rise. Gold’s weakness this week, from around $4,390 last Friday to $4,285, fits that script. Silver fell harder, closing near $64 after a $67 finish the week before, with its thinner futures market amplifying the move. The gold-silver ratio held near 67, which analysts read as a market that sold both metals and sold silver somewhat harder, rather than a panic extreme.
The counterargument is fiscal. Washington faces more than a trillion dollars a year in interest expense, and every increase in long rates makes the debt more expensive to carry. If investors are demanding more yield to hold US duration because they doubt the fiscal path, that is the kind of yield rise gold historically benefits from, not suffers from. This week’s data points to the first story, not the second, but the two are hard to separate in real time, and a term-premium driven selloff can be bearish for gold in the week and bullish for it in the year.
China keeps buying
Away from the daily tape, the structural bid continues. China imported more than 1,100 tonnes of gold in the first eight months of 2026, spending about $159 billion according to Chinese customs data, already more than the country imported in all of 2025 and the highest pace since at least 2017. The People’s Bank of China added roughly 20 tonnes in August, its 23rd consecutive month of reported purchases, bringing official holdings to about 2,386 tonnes.
Chinese investors have been looking for alternatives to stocks and property, and gold has commanded a slight premium inside China, which encourages more metal to flow in. Meanwhile China’s reported holdings of US Treasury debt fell to their lowest level since 2008 in July. The two flows point in the same direction: less exposure to US paper, more exposure to metal.
Central bank buying globally now runs at roughly 1,000 to 1,100 tonnes a year, against mine supply of about 3,500 tonnes. That is a large share of annual output absorbed before Western investment demand even enters the market, and it is the number bull-case analysts point to when they argue that gold’s floor has structurally risen even as the daily tape swings on Fed commentary.
| Level | Context | |
|---|---|---|
| 10-year Treasury yield | 5.23% | Highest since 2007 |
| 30-year Treasury yield | 5.45-5.49% | Highest since 2004 |
| 10-year real yield | 2.76% | Up 33bp in two weeks |
| Spot gold | $4,285 | Down ~2% on the week |
| Spot silver | $64 | Down from $67 |
| China gold imports, Jan-Aug | 1,100+ tonnes | Highest since at least 2017 |
What the banks are saying
Sell-side targets have not moved despite the correction. Goldman Sachs keeps its $5,400 end-of-2027 forecast, with analysts there describing the current move as an elongated pause rather than the end of the bull market. J.P. Morgan sits at $6,300, Deutsche Bank at $6,000, and Bank of America at $6,000. All of these forecasts assume central bank buying continues at roughly the current pace, and most of them were set when gold traded well above $4,500, so they embed a wider margin of error than the headline numbers suggest.
Goldman’s commodities team has also flagged $4,000 as a level with real institutional sponsorship, a zone where sovereign buyers have historically shown up. That is about 6.6% below Friday’s close. Traders watching the chart are focused on $4,240 to $4,280 as the near-term support band; a decisive break below $4,240 with yields still rising would open the door to that lower zone, while a reclaim of $4,400 would suggest the rate shock has run its course and the market can refocus on the structural story.
The near-term catalyst is data. A soft payroll report or a crack in inflation would pull real yields lower and give gold oxygen. Another hot print does the opposite, and with the Fed’s October meeting approaching, positioning is already defensive. Until one of those lands, the market is caught between a hawkish Fed on one side and a structural official-sector bid on the other, and the weekly swings are likely to stay violent in both directions.