COMMENTARY – Gold prices risk further falls depending on US dollar, Treasury yields


By David Brough

Gold, which hit a more than seven-month low last week, risks further falls in the near term depending on the U.S. dollar and Treasury yields.

Gold was up 0.66 percent to $1,784.40 per ounce.

Expectations of a swift vaccines rollout are raising hopes for global economic recovery, reducing the “safe-haven” appeal of gold.

Gold is also competing with cryptocurrency bitcoin, and possibly silver, which has a constructive story due to tightness in supplies of newly mined metal and expectations of strong industrial demand.

Rising US Treasury yields have weighed on prices of non-yielding gold lately.

A strengthening dollar could drag on bullion, as it would make gold costlier in terms of other currencies.

However, gold is likely to remain underpinned by a US $1.9 trillion stimulus package that is expected to relieve the devastation of the coronavirus pandemic on American livelihoods.

The stimulus package may raise inflationary fears, which could buoy bullion seen as a hedge against rising prices.

Disclaimer: Any opinions expressed in this column are solely those of the author and should not be considered as investment advice.Gold Commentary

Credit: Kimjoux