Gold Dips as 10-Year US Treasury Yields Rise Above 1% - Forex News by FX Leaders
Gold Dips as 10-Year US Treasury Yields Rise Above 1%

Gold Dips as 10-Year US Treasury Yields Rise Above 1%

Posted Thursday, January 7, 2021 by
Arslan Butt • 1 min read

Gold prices are on the decline in early trading on Thursday after a Democrat victory in the recent Senate elections in Georgia, as US Treasury yields rise higher amid hopes for more fiscal stimulus measures to boost economic growth. At the time of writing, GOLD is trading at a little above $1,920.

Over the previous session, gold prices fell by over 1.5% as markets cheered the election results, sending 10-year US bond yields to over 1% for the first time since mid-March 2020 when the coronavirus pandemic started spreading around the US and most parts of the world. However, losses in the yellow metal remain limited as a victory for the Democrats strengthens the likelihood of more stimulus measures to prop up the US economy.

Gold is considered a hedge against inflation, gaining whenever more stimulus measures are implemented. This is because an increase in fiscal stimulus weakens investor confidence in an economy as it signals trouble, which also weakens the currency – the US dollar in this case, which shares a negative correlation with the safe haven metal.

Gold also received some support from the Fed reaffirming its commitment to stick to its bond-purchase program in its latest policy meeting. In addition, the number of hospitalizations due to coronavirus rose to a record high on Wednesday, keeping the safe haven appeal of the precious metal high.

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About the author

Arslan Butt // Index & Commodity Analyst
Arslan Butt is our Lead Commodities and Indices Analyst. Arslan is a professional market analyst and day trader. He holds an MBA in Behavioral Finance and is working towards his Ph.D. Before joining FX Leaders Arslan served as a senior analyst in a major brokerage firm. Arslan is also an experienced instructor and public speaker.
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