Gold declines as dollar and US Treasury yields gain

Cornelia Mascio
Gennaio 14, 2021

Spot gold was up 0.2% at $1,847.36 per ounce at 10:56 a.m. EST (1556 GMT), while USA gold futures fell 0.4% to $1,846.70.

Gold prices edged lower on Thursday as the dollar resumed its rebound from 2018 lows amid speculation that any spikes in US inflation could lead to the Federal Reserve tapering its bond-buying program.

While gold is considered a hedge against the inflation and currency debasement that can result from widespread stimulus, a recent jump in bond yields has challenged that status as it increases the opportunity cost of holding non-yielding bullion.

Yields on the benchmark Treasury note dropped to 1.071%, down from an nearly 10-month high of 1.187% on Tuesday.

Gold prices fell on Thursday, to deepen losses for the second straight day near a 6-week low, due to the USA dollar's strong performance and ahead of Joe Biden's reveal of a huge stimulus plan.

Biden will reveal later today trillions of dollars of Covid relief during the first year of his term, with some estimates putting it at $2 trillion.

Investors will also be focused on further clues on the US monetary policy outlook when Federal Reserve Chairman Jerome Powell participates in a virtual event, due at 1730 GMT.

Sterling hit a seven-week high against the euro on Wednesday, building on gains during the previous session when the Bank of England's governor dismissed the idea of negative interest rates, while optimism over the pace of Britain's vaccination rollout also offered support.

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