Record rise in gold prices in the world market, the reason behind

Gold prices have seen another major rise in the international market. On Wednesday (August 19), the price of the precious metal rose by more than 4 percent and exceeded the $4,500 per ounce mark. At the same time, the price of silver has also increased by more than 5 percent. This upward trend has been seen in the gold and silver markets as the interest rates on Treasury bonds have decreased after the announcement of the increase in the repurchase program of long-term government bonds by the United States. News by Yeni Safak.

As of Wednesday, the price of gold in the spot market rose by 4.3 percent to reach about $4,520 per ounce. At the same time, the price of silver rose by 5.3 percent to $66.70.

Market rise after bond repurchase

The US Treasury Department said that the amount of repurchases of notes and bonds with maturities of 10 to 30 years will be at least doubled. Each repurchase program plans to buy at least $4 billion in government bonds, up from the previous $2 billion.

After the announcement, U.S. government bond interest rates fell sharply. The 30-year Treasury bond interest rate fell to about 5.2 percent. On Tuesday, it rose to 5.34 percent, which was close to the highest level since 2007. In addition, the 10-year Treasury bond interest rate also fell. Treasury officials said that the main purpose of this repurchase program is to increase liquidity in the market. Its main goal is not to deal with severe pressure or crisis in the market.

Weaker dollar, lower interest rates increase demand for gold

When bond interest rates fall, investors' interest in gold usually increases. Because gold does not pay any interest. As a result, when bond interest rates fall, the opportunity cost of holding gold also decreases. At the same time, the weakness of the U.S. dollar has also helped increase gold prices.

The dollar index, which measures the greenback against a basket of major currencies, fell nearly 0.9 percent to 98.70.

Meanwhile, investors are now looking to the minutes of the US Federal Reserve's July meeting, which could provide important clues about policymakers' assessment of inflation and the direction interest rates may take in the future.

Market participants believe that any hint of a possible interest rate cut in the Fed's statements could put further upward pressure on gold and silver prices.