These days, when I browse the economic sections of portal sites, there’s a number that keeps catching my eye.
International gold prices at $4,500 per ounce. I also saw news that the price of pure gold per don in Korea has already surpassed 870,000 won.
However, as I looked closer at this price surge, I discovered something strange.
On the very day gold prices spiked, the announcement that moved the market came not from the Fed, but from the Treasury.
And it wasn’t about raising or lowering interest rates, but a single phrase: “We will buy back more Treasury bonds.”
The Treasury, Not the Fed, is Shaking the Market
For a long time, we’ve understood gold prices like this:
If the Fed raises interest rates, the dollar strengthens and gold is suppressed. If they lower rates, the opposite happens.
This formula has been almost unfailingly correct for decades.
However, in recent months, this formula has started to falter.
On August 20th, US Treasury Secretary Janet Yellen stated in a CNBC interview that the Treasury could expand its buyback of long-term Treasury bonds – bonds issued into the market – to over $4 billion per transaction.
The day before, the Treasury had already announced it would double the limit for a single repurchase of long-term Treasury bonds from the previous $2 billion to at least $4 billion.
The nominal reason was to bolster market liquidity, but Yellen herself diagnosed that current Treasury yields were not accurately reflecting the real economy’s fundamentals.
The market interpreted these remarks differently.
Following the announcement of Treasury bond purchases, gold prices hit a two-month high, bolstered by the positive news of bond buybacks. Simultaneously, Bitcoin surged by over 20%.
Two completely different assets reacted in the same direction to the same news.
Why is this strange?
Normally, the Treasury buying back bonds should be a signal that “demand for safe-haven Treasury bonds is high.”
Yet, the market interpreted it in the opposite way.
Not as a sign of buying bonds, but as a signal that the situation is so bad that the government must intervene to prop up bond prices.
Why the Number $40 Trillion in Debt Doesn’t Feel Real
US national debt of $40 trillion. No matter how many times I see this number in the news, it doesn’t quite sink in. It’s too large.
However, if you break it down differently, the story changes.
With the fiscal deficit for fiscal year 2026 expected to exceed $1.8 trillion, and AI companies also issuing large amounts of corporate bonds for infrastructure investment, the Treasury bond market is facing a supply overhang.
As a result, the yield on 30-year Treasury bonds soared to 5.27%, the highest in 19 years.
When Treasury yields rise this much, the interest payments the government has to make each year snowball.
An increase in interest payments from the national budget means less money is available for other areas.
This is precisely where the Treasury, alarmed, intervened.
The decision to increase purchases of long-term Treasury bonds, from 10-year to 30-year maturities, starting September 9th, was ultimately an attempt to suppress this interest burden somehow.
A Structure Where the Debtor Sets the Price of Their Own Debt
This is where we need to twist our thinking a bit.
If the issuer of Treasury bonds and the entity intervening in their price are the same, it’s a different story from market principles.
Normally, debt works like this:
A borrower, finding the interest burdensome, cannot directly approach a creditor and intervene in the market price to “ask for a reduction in interest.”
However, national debt is different.
It’s a structure where the indebted government also acts as the largest buyer of that debt (Treasury bonds).
Essentially, the issuer is defending the price of their own debt in the market.
In recent years, the US Treasury has rapidly increased the proportion of short-term bond issuance while reducing long-term bond supply, which can be understood in this context.
They have altered the issuance structure itself to prevent long-term yields from rising.
One analysis points out that the center of gravity in the US financial system is shifting from the Fed’s interest rate policy to the Treasury’s debt management.
The problem is that this defense comes at a cost.
Increasing the proportion of short-term bonds means maturities come due faster.
This means the debt must be continuously rolled over (refinanced).
Given the large amount of debt maturing in 2026, the government is caught in a dilemma between trying to maintain control over its finances and the structural issue of declining real currency value.
The Gold Price Rollercoaster, Redrawn with Numbers
If you summarize all these trends in one sentence, it’s bland, but laying them out chronologically reveals a different story.
In January 2026, gold prices hit a new high twelve times from the start of the year, soaring to nearly $5,600 per ounce.
However, by June, gold prices plummeted below $4,000.
This was a severe correction, a drop of nearly 29% from its peak.
Then, from early August, it began to recover, surpassing the $4,400 mark, and in late August, it broke through $4,500, setting a new all-time high of $4,541.30 per ounce according to the Singapore Exchange.
In just half a year, from $5,600 to $4,000, and then back to $4,500. With such a swing, it’s closer to a volatile growth stock than a commodity.
Yet, people still call gold a “safe asset.”
This contradiction is close to the essence of what is happening in the gold market right now.
On an annual basis, gold prices have surged 72%, looking set to close the year as its best performance since 1979.
If a safe asset is recording a surge comparable to the 1979 oil shock, it means this asset is no longer moving solely as a “risk aversion tool.”
The Real Reason Gold and Bitcoin Move in the Same Direction
In traditional asset textbooks, gold and Bitcoin are classified as having opposite characteristics.
One is a 5,000-year-old physical asset, the other a nascent asset that exists only as code. However, recent trends show these two moving in almost the same rhythm.
One of the main drivers of the gold price rally was the weakening dollar index, with a 0.4% drop in the dollar’s value against six major currencies stimulating gold demand.
The same logic applies directly to Bitcoin.
Bitcoin surged over 20% on a weekly basis, coinciding with the news of Treasury bond buybacks, and Coinbase, a related stock, also jumped 26%.
There is one connecting thread between these two assets.
When confidence in the currency system denominated in dollars wavers, people move into “assets not guaranteed by the state.”
Gold is the oldest choice, and Bitcoin is simply the most recent one.
Despite their opposite appearances, they are the same asset class in that they are answers to the same question.
They are assets that serve as a refuge when the promises of the nation issuing the currency begin to falter.
An interesting counterargument exists here.
Some research institutions point to structural buying by central banks as the main driver of gold price increases, and there are analyses that ongoing purchases by central banks, including China’s, are indeed supporting gold demand.
However, this buying spree and the liquidity signal from the Treasury are not mutually exclusive.
Rather, they tend to amplify each other’s impact when they overlap.
[INFOGRAPHIC: “Gold’s 2026 Rollercoaster: From $5,600 to Under $4,000 and Back” — A line chart timeline plotting the gold price trajectory across January (peak near $5,600), June (trough below $4,000), and August (recovery past $4,500), with annotated events at each inflection point. Placed here to make the extreme volatility described in the preceding sections visually concrete.]
Ultimately, It Wasn’t Gold That Rose, But the Price Tag of Trust
This is where we need to flip our perspective one more time.
Up to now, we’ve asked, “Why did gold prices rise?”
But if we change the question, a different picture emerges.
It wasn’t gold that rose, but the price of an alternative asset, reflecting the erosion of people’s confidence in the currency system.
Gold itself did nothing. Mining output didn’t suddenly decrease, nor did new industrial demand explode.
What changed was the other side of the scale next to gold, namely the traditional currency system of dollars and Treasury bonds.
As that scale tilted, the number called the gold price simply went up.
J.P. Morgan Global Research recently diagnosed the gold market as entering a phase of structural repricing beyond simple speculation, even mentioning the possibility of breaking through $5,000 by the end of next year.
The term “structural repricing” is accurate.
This is not a repricing of gold as a commodity, but a repricing of the currency system itself, to which gold is compared.
The Meaning of the Term “Safe Asset” is Changing
Watching this trend, I’ve come to believe that the definition of the word “safe asset” itself is changing.
In the past, safe assets were synonymous with Treasury bonds. As long as the nation didn’t collapse, principal and interest were guaranteed.
However, now the nation itself has to intervene in the market to defend the price of its own debt, and people are moving instead to gold and Bitcoin.
The concept of safety is shifting from “what is guaranteed by the state” to “what exists independently of the state.”
This is not just an issue for a specific country or government, but a question facing the entire modern currency system, which runs on debt.
Anyone who holds won deposits, domestic bond funds, or pension assets is not entirely free from this trend.
When US Treasury yields fluctuate, the benchmark for asset prices worldwide also shakes.
The upward curve drawn by gold and Bitcoin today might be quietly asking us:
Is the asset you currently believe to be safe truly sufficient based solely on the promise of that nation?
References
- Benzinga Korea, “Weekly Market Trends: Bessent’s ‘Temporary Fix for Treasury Bonds’ and Bitcoin’s Biggest Surge Since 2023”
- TradingEconomics, “Gold - Prices - Charts - Historical Data - News”
- SeattleN, “Gold Price Surpasses $4,500 for the First Time Ever… Venezuelan Crisis and US Interest Rate Cut Expectations”
- Finance-scope, “US Treasury Secretary Janet Yellen: ‘Treasury Buyback Can Exceed $4 Billion… Sufficient Policy Tools Available’”
- TradingKey, “Everyone is Watching the Fed. Bessent’s Treasury is the Real Wildcard for Gold”
- Vietnam.vn, “Gold Price ‘Rollercoasters’ from $5,600 to Below $4,000”
- CBC News, “[Breaking] International Gold Price Surpasses $4,500 per Ounce… Has the Traditional Formula Been Shaken?”
- CBC News, “Gold Price? … ‘Keenly Watching’ Whether It Breaks $4,500, Dollar Movements, etc.”
- Korea Gold Exchange Official Website, Real-time Gold Price Data
- Investing.com, “US 10-Year Treasury Bond Prices and Market Trends”