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

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 in

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

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

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 See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.