Gold price set for biggest weekly jump in 13 months on haven demand
The precious metal has surged around 30% so far this year, supported by healthy central bank buying.
Gold prices continued to slide on Monday as the dollar and US treasury yields kept marching higher and prompted investors to dump the non-yielding metal.
Spot gold dropped another 1.2% to $1,679.67 per ounce by 11:40 a.m. EST, its lowest since early June. US gold futures too fell by 1.2%, down to $1,677.40 per ounce.
Click here for an interactive chart on gold prices.
Meanwhile, the greenback climbed to a three-month peak, while the US 10-year Treasury yield held close to a more than one-year high, increasing the opportunity cost of holding gold, which pays no interest.
“We have an economy that is recovering and inflation is materializing; that ultimately means that yields have room to move higher,” Bart Melek, head of commodity strategies at TD Securities told Reuters in a note, adding that gold could fall further towards $1,660 as a result.
Even US Congressional approval of President Joe Biden’s $1.9 trillion covid-19 relief package, which would have raised inflation expectations, failed to keep the precious metal afloat.
Gold is widely considered a hedge against inflation that is likely to stem from widespread stimulus, but higher bond yields this year have threatened that status as they translate into a higher opportunity cost of holding bullion.
Analysts also said US Federal Reserve Chair Jerome Powell’s failure to address the recent surge in yields last week further pressured gold.
(With files from Reuters)
