Dollar rebound takes the shine off gold

Bengaluru — Gold prices fell on Thursday as US treasury yields and the dollar rebounded, while investors awaited details on incoming US president Joe Biden’s coronavirus stimulus proposal.

Spot gold fell 0.3% to $1,838.39/oz by 3.17am GMT, while US gold futures slipped 0.9% to $1,838.90. Benchmark 10-year treasury yields rose to hover near 10-month highs, also helping to lift the dollar against rival currencies.

Markets are eyeing Biden’s economic relief plan due later in the day and estimated to cost “trillions” of dollars in an effort to deliver immediate pandemic “rescue” efforts.

“Fiscal stimulus will help boost economic recovery, leading to rising real interest rates as well as bring up [the] Fed’s tapering hopes; on the flip side, it will also increase the inflation outlook,” said DailyFX strategist Margaret Yang. So, gold will be struggling around these price levels as the stimulus will have both positive and negative effect on it, she added.

Investors will also be focused on further clues on the US monetary policy outlook when Federal Reserve chair Jerome Powell participates in a virtual event, due at 5.30pm GMT. The Fed said on Wednesday the US economy was growing modestly, though the optimism was tempered due to a surge in coronavirus cases.

“I don’t think the Fed is serious about tapering any time soon, given the pandemic situation and fragile economic recovery, however, any hint about tapering maybe in the slightly longer horizon will trigger some jitters among gold traders,” Yang said.

The US House of Representatives passed a single article of impeachment accusing President Donald Trump of “incitement of insurrection”, making him the first president in US history to be impeached twice.

Silver rose 0.1% to $25.16/oz, platinum climbed 0.4% to $1,098.34, while palladium eased 0.3% to $2,378.37.