Spot gold was down 0.1% at $4,516.19 an ounce after slipping as low as $4,450.08, retreating from the highest level since June 2 that it hit earlier in the session.
Gold had leapt over 4% on Wednesday, while the U.S. dollar and bond yields dropped sharply after the Treasury’s announcement it would increase buybacks of longer-dated bonds.
U.S. gold futures settled 0.6% higher at $4,571.40.
“Gold has come under routine profit-taking pressure following the previous session’s strong gains,” said Jim Wyckoff, a market analyst at American Gold Exchange.
The somewhat hawkish U.S. Federal Reserve minutes released Wednesday, coupled with higher oil prices, have revived inflation concerns and also undermined the metal, he added.
However, gold pared some losses after Treasury Secretary Scott Bessent said in a CNBC interview on Thursday that the government might increase repurchases of Treasury bonds, which could be more than $4 billion per issue.
“Gold is helped by prospect of lower long term real rates,” independent analyst Tai Wong said.
Although investors often regard gold as a safeguard against inflation, higher interest rates can curb demand by increasing the opportunity cost of holding a non-yielding asset.
Minutes from the Fed’s July meeting highlighted some policymakers’ concerns about inflation and showed that several officials remained open to further rate hikes.
Traders have priced in a 67.4% chance of a Fed hold in September, according to the CME FedWatch Tool.
Oil prices extended their rally to a more than three-week high as stalled talks over the Iran conflict sustained market concerns about Middle East supply disruptions.
“With our U.S. economists expecting the Fed to remain on hold, we see scope for gold to exceed $5,000/oz in 2027, potentially earlier,” but with scope for volatility too, Morgan Stanley analysts said in a note.
Among other metals, spot silver rose 1.9% to $68.16 per ounce, platinum was little changed at$1,824.72 and palladium edged 0.1% lower to $1,330.74.