Gold Turns Even More Bearish as Economic Recovery Hopes, Treasury Yields Rise - Forex News by FX Leaders

Gold Turns Even More Bearish as Economic Recovery Hopes, Treasury Yields Rise

Posted Tuesday, March 30, 2021 by
Arslan Butt • 1 min read

Gold is on an extremely bearish footing on Tuesday, slipping to an over two-week low on account of a strengthening in US Treasury yields and the dollar over rising expectations for rapid recovery in the world’s most powerful economy. At the time of writing, GOLD is trading at a little above $1,704.

Higher bond yields drive up the opportunity cost of holding non-yielding bullion and make it less appealing as an investment, exerting downward pressure on the yellow metal. In addition, global markets are trading with a risk-on sentiment, diminishing the safe haven appeal of gold and sending traders towards riskier instruments.

Gold has come under pressure in recent weeks as markets and even officials from the US government and central bank anticipate the economy to post a swift recovery, boosted by strong COVID-19 vaccine rollout programs and multiple rounds of fiscal stimulus. Traders are turning increasingly hopeful that the improved economic outlook would be further supported by an improvement in consumer spending, which in turn would hike up inflation – one of the main reasons that has been strengthening US Treasury yields.

Analysts have also forecast further bearishness in sight for the precious metal on the back of rising hopes for global economic recovery. However, gold prices are likely to enjoy some support from the latest wave of the pandemic that has sent parts of Europe back into lockdown mode even as emerging markets like Brazil and India are also reporting a spike in fresh infections.

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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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