Gold prices pulled back below US$4,500 an ounce in Asia on Thursday after reaching an 11-week high of US$4,528 in early trade, driven by the United States Treasury's bond-buyback plan.
By 4 pm AEST (6 am GMT), spot gold was down 0.8% at US$4,484.51 an ounce.
Gold reached a two-month high overnight as investors reacted to the U.S. Treasury's plan announced on Wednesday to ease pressure in the bond market after longer-dated Treasury yields surged and triggered market volatility.
The U.S. Treasury said it would double the size of buybacks for 10- to 30-year Treasury securities to at least $4 billion per operation.
The increase from the previously planned $2 billion buybacks will cover the 10-year to 20-year and 20-year to 30-year sectors and take effect from 9 September through 4 November, according to the department.
The announcement provided relief to global markets, pushing Treasury yields and the U.S. dollar lower while boosting non-yielding assets such as gold.
Meanwhile, the latest FOMC minutes showed growing concern among policymakers over persistent inflation. Several officials were open to raising interest rates, while many said a rate hike could be necessary if inflation fails to move back towards the Fed's 2% target.
U.S. President Donald Trump also threatened in a post on Truth Social on Thursday that the U.S. would launch the “most crushing economic operation ever taken against any country”, declaring economic warfare and isolation against Iran on an “unprecedented scale”.
Looking ahead, traders will focus on U.S. jobless claims for further clues about the health of the labour market.
