Published: Wed, January 13, 2021
Economy | By

Gold edge higher following decline in United States dollar and Treasury yield

Gold edge higher following decline in United States dollar and Treasury yield

The pullback in yields pushed the United States dollar below 104 Japanese yen to trade at 103.66 yen by midsession in Asia though moves were slight as U.S. dollar bears' conviction wavered.

Meanwhile in USA politics, House Democrats Monday introduced a resolution to impeach Donald Trump for a second time, setting up a vote this week after the riot at the Capitol. Platinum rose 0.3% to $1,079.21, while palladium eased 0.2% to $2,388.78.

With Asian stock markets also lower, MSCI's gauge of stocks across the globe shed 0.65% after closing at a record high on Friday.

The U.S. dollar advanced across the board on Wednesday, shaking off the weakness of the previous session, as it continued its recent rebound from last week's near three-year low.

The benchmark 10-year T-bill yield rose to 1.156% at 4:10 a.m. ET, while the yield on the 30-year T-bill rose to 1.888%.

Expectations of a multitrillion-dollar stimulus plan and the belief the Federal Reserve will not act to counter rising interest rates, along with new Treasury supply are helping yields rise, said Gennadiy Goldberg, an interest rate strategist at TD Securities in NY.

The climb in yields in turn offered some support to the dollar, which rose to its highest in over two weeks against a basket of currencies.

"You are seeing a continuance of the US outperformance trade", Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

Elsewhere, the hitherto soaring Australian dollar fell almost 1% to $0.7693, unmoved by another solid month of local retail sales.

Crude oil prices fell, hit by renewed concerns about global fuel demand amid tough coronavirus lockdowns across the globe, as well as the stronger dollar.

The pullback in yields pushed the dollar below 104 Japanese yen to trade at 103.95 yen, up 0.2%.

Gold futures on MCX (Multi Commodity Exchange of India) opened slightly higher at Rs 49,320 per 10 grams after closing with marginal gains at Rs 49,300 on Monday at 11.55 pm, post the announcement on impeachment.

"The big picture is it's still a very constructive year for gold". Silver fell 1.66% to $24.95. On Monday, prices touched their lowest since December 2.

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