Gold hovers near 1-week peak as Treasury yields retreat
· Gold prices hovered near a one-week peak on Tuesday after gaining 1.5% in the previous session, as U.S. Treasury yields retreated, lifting the appeal of the bullion.
· Spot gold rose 0.1% to $1,809.57 per ounce by 0057 GMT, having hit its highest since Feb. 16 at $1,812.31 on Monday. U.S. gold futures gained 0.1% to $1,809.30.
· The dollar reached multi-year lows on Monday against the British pound and the Australian dollar as traders focused on the promise of coronavirus vaccinations and economic growth outlook.
· Benchmark U.S. Treasury yields eased from a near one-year peak on Monday. Higher yields increase the opportunity cost of holding bullion.
· U.S. President Joe Biden on Monday launched changes to the U.S. coronavirus aid program for small businesses to try to reach smaller and minority-owned firms.
· The advancement of a proposed $1.9 trillion U.S. COVID-19 relief bill added to concerns about inflationary pressures. Gold is often viewed as a hedge against inflation.
· The European Central Bank is “closely monitoring” the recent rise in government bond yields, ECB President Christine Lagarde said on Monday, the clearest sign yet that policymakers are becoming uncomfortable with the recent surge in borrowing costs.
· Bitcoin fell on Monday after surging to its latest record high a day earlier as a sell-off in global equities curbed risk appetite.
· The United States on Monday crossed the staggering milestone of 500,000 COVID-19 deaths.
· Investors now await the testimony of U.S. Federal Reserve Chairman Jerome Powell on the Semiannual Monetary Report to Congress on Tuesday.
· SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 1.1% to 1,115.4 tonnes on Monday.
· Gold holds above $1,800 but any major upside push likely to be elusive for now
For now, buyers are keeping near-term control as price holds above $1,800 as well as the 200-hour moving average (blue line) closer to $1,804.
The dollar's sluggishness and commodities push have helped gold to rebound a little to start the week but any sustained upside momentum may still prove to be elusive for the yellow metal in the bigger picture.
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As things stand, gold is keeping a modest bounce upon testing the 30 November low @ $1,764.80 last week. But in the context of price action since peaking in August last year, gold has been trading more sideways at best.
· Gold Gains as 10-Year US Treasury Yields Ease From One-Year High
Early on Tuesday, gold is trading bullish, with prices close to the highest levels seen in a week, on account of a weak US dollar even as US Treasury yields slide lower and boost the appeal of the safe haven metal. At the time of writing, GOLD is trading at a little above $1,812.
The bullishness in gold also received a boost from falling US Treasury yields, which increased the precious metal’s appeal as an investment. On Monday, the benchmark 10-year US Treasury yields slipped from the highest levels seen since a year, helping the yellow metal make more gains.
Meanwhile, the next round of fiscal stimulus measures for the US economy appears to be making progress, with President Biden initiating changes to help more small and minority-owned businesses that have been impacted by the pandemic. The release of more stimulus is also expected to increase the safe haven appeal of gold and support its bullishness in the coming sessions.
· Gold Price Analysis: XAU/USD's technicals suggest limited further upside ahead of Powell’s testimony
Gold is rising, with XAU/USD recapturing the $1,800 level. However, XAU/USD’s recovery appears limited ahead of Powell, according to FXStreet’s Dhwani Mehta.
“Powell is likely to reiterate his dovish stance, exerting additional downside pressure on the US dollar. Meanwhile, the market optimism-driven by encouraging vaccine developments could likely bode ill for the safe-haven gold. All in all, gold is likely to hold onto its recovery mode, awaiting fresh cues from the US CB Consumer Confidence data and Powell’s testimony.”
“The bulls could extend control towards the $1820 round number, above which the resistance at $1825 could be challenged.”
“The daily chart shows that the bearish 21-simple moving average (DMA) at $1821 could cap the recovery from seven-month tops, as the RSI turns flat below the midline.”
“Should the downside pressure regain momentum, a test of the November lows at $1765 would be back on the table. Also, the seven-month lows at $1761 could be at risk.”
· Silver eased 0.4% to $28.04 an ounce. Platinum shed 0.4% to $1,267.46, while palladium climbed 0.3% to $2,401.52.
Reference: Reuters, Forex Live, FX Leader, FXStreet
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