Photographer: Chris Ratcliffe / Bloomberg
Photographer: Chris Ratcliffe / Bloomberg
Gold has fallen to widen the biggest drop in two months amid dollar gains, Treasury yields and equities as investors weigh in on President-elect Joe Biden’s commitment to detail huge US economic aid plans.
Bullion endured a week of change as January began, and early gains were offset as an increase in Treasury yields diminished the interest-free asset attractiveness. This came as the dollar recovered from its lowest level in three years. The S&P 500 hit another record on Friday.
Gold posted its biggest annual gain in a decade last year as the pandemic entered the global economy, and central banks and governments boosted incentives. With the launch of vaccines, traders are weighing the outlook for paradise in 2021, assessing drivers, including prospects for further massive support, changes in inflation expectations and risk appetite.
Biden Friday called for immediate additional aid of billions of dollars, including an increase in direct payments, after the increase in the number of coronavirus cases led to a drop in US wages for the first time since April. He will present his proposals on Thursday, before taking office on January 20.
Rising yields are “pouring cold water on gold right now,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. “Rising inflation expectations and higher yields are attracting gold in different directions right now and the latter seems to be predominant. Gold could move sideways for now, but rising inflation expectations are likely to drive gold higher during the year.
Spot gold fell as much as 1.7% to $ 1,817.49 an ounce, the lowest level since Dec. 2, before declining trading losses to $ 1,836.76 at 10:57 in Singapore. The price fell by 3.4% on Friday, the most since November 9. Silver, platinum and palladium declined as the Bloomberg Dollar Spot Index rose 0.4%.
Meanwhile, in US politics, the House this week will adopt a resolution for accuses Donald Trump of his actions, encouraging the mob that stormed the Chapter, said President Nancy Pelosi. At the same time, the president is planning a challenging last week in office, according to people familiar with the matter.