Gold Dips But On Track to Post Best Gain Seen in Five Weeks - Forex News by FX Leaders
Gold Dips But On Track to Post Best Gain Seen in Five Weeks

Gold Dips But On Track to Post Best Gain Seen in Five Weeks

Posted Friday, January 22, 2021 by
Arslan Butt • 1 min read

Early on Friday, gold prices are on the decline as a result of a strengthening in US Treasury yields, but are still on track to post the best performance seen in five weeks due to a weakness in the US dollar and increased expectations for additional fiscal stimulus rollout. At the time of writing, GOLD is trading at a little above $1,862.

So far this week, spot gold has gained 2.2% after hitting a high of over $1,874 in the previous session. However, US Treasury yields were on the uptick on Thursday, as markets anticipated a rise in inflation even as they considered the possibility of fresh debt supply as a result of increased spending by the Biden administration.

While the prospect of more stimulus measures in the US continues to support the safe haven appeal of gold, it shares a negative correlation with US Treasury yields. Higher treasury yields make gold more expensive to hold, denting weakening its appeal and sending investors away from purchasing the precious metal.

Gold also enjoys support from a continued weakness in the US dollar, which fell to the lowest level seen in over a week on Thursday. A weaker dollar makes it more affordable for holders of other currencies to invest in bullion, helping limit its losses even when it trades bearish.

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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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