Gold is Trying to Overcome the Resistance at the Level of 1740
The price of gold fell to the level of $1727 per ounce. The quotes failed to overcome the strong resistance level of 1740 and resumed the decline phase.
The US dollar received support from the speech of the Fed Chairman Jerome Powell and the head of the Treasury Department Janet Yellen. Last week, the US Central Bank reaffirmed its commitment to the course of monetary policy, despite the expected inflationary pressures. Inflation figures are likely to be decisive in the markets in the coming months, especially given the high uncertainty of economic growth.
The gold market will continue to struggle in the short term as investors adjust to higher interest rates. However, the precious metal will remain an important element of the investment portfolio until the end of 2021 and beyond. With the US economy expecting a sustained recovery, it's no surprise that bond yields are rising sharply. In the current economic conditions, the yield on 10-year bonds may increase to 2%, which, however, is an extremely low level by historical standards and remains a positive moment for gold.
The precious metal also remains attractive as a safe-haven asset, as geopolitical tensions may rise in the near future. In particular, last week the United States strained relations with Russia and China. The current political environment will create some upward pressure on the safe haven asset over the course of the year.