Gold Weakens as US Treasury Yields and Dollar Remain Strong
Gold is trading bearish into Tuesday as the benchmark 10-year US Treasury yields continue to hold above a more than one-year high, supporting the US dollar and weakening the appeal of the yellow metal by increasing the opportunity cost of holding non-yielding bullion. At the time of writing, GOLD is trading at a little above $1,737.
Later today, there could be considerable volatility in gold prices following the congressional testimony of Fed Chair Jerome Powell and US Treasury Secretary Janet Yellen. For now, expectations are that the yellow metal could encounter pressure to the downside, amid rising hopes for rapid economic recovery in the US.
However, any comments from either policymaker about the recent spike in bond yields and any possible measures being considered to counter them could send gold higher. So far, officials have played down the effect of high inflation and strengthening bond yields on the economy.
For now, losses in gold remain limited by rising worries about the third wave of the coronavirus pandemic currently underway across Europe and its impact on the economy. Several countries have imposed or extended lockdowns and restrictions which could delay and weaken economic recovery in the region, even as the COVID-19 vaccine rollout slows down in the region.
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