Gold is Heavily Dependent on US Treasury Bond Yields
The dollar remains steady, and the yield on 10-year Treasury bonds is at its highest level in more than a year, putting pressure on the precious metal. Fed Chairman Jerome Powell reiterated that the Central Bank will continue to provide assistance to the economy for as long as necessary, as the recovery is still far from complete. Richmond Fed President Thomas Barkin said Sunday that there are no signs of unwelcome inflationary pressures yet. The value of gold has fallen about 8% this year as investors switch from safe havens to riskier assets, while retaining some interest in the asset as a hedge against inflation.
Credit Suisse also notes that gold remains vulnerable to a rise in US Treasury yields and a rebound in the dollar. The precious metal is losing momentum as economic growth optimism grows. Moreover, rapid progress in vaccination and additional fiscal incentives have increased risk appetite. Against this background, gold investors are taking a cautious position, which leads to a sharper outflow of capital from exchange-traded funds. At the moment, the quotes are at a strong resistance and may fall below the key level of $ 1,700 in the near future.