Photographer: Chris Ratcliffe / Bloomberg
Photographer: Chris Ratcliffe / Bloomberg
Gold fell to extend its largest decline in two months amid gains in the dollar, treasury bonds and stocks, with investors weighing up President-elect Joe Biden’s promise to work out plans for massive US economic aid.
Bullion went through a turnaround week as January kicked off, wiping out early gains as a rise in government bond yields weakened the non-interest-bearing asset’s appeal. That came as the dollar recovered from its lowest level in nearly three years. The S&P 500 hit another record Friday.
Gold posted its largest annual gain in a decade last year as the pandemic swept through the global economy and central banks and governments stepped up the stimulus. As vaccines roll out, traders are weighing the port’s outlook for 2021, assessing factors including the prospects for further massive support, shifts in inflation expectations and risk appetite.
Biden on Friday called for trillions of dollars in immediate further aid, including increased direct payments, after an increase in coronavirus cases caused US payrolls to drop for the first time since April. He will present his proposals on Thursday, before taking office on January 20.
The rise in interest rates “is currently pouring cold water on gold,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. “Rising inflation expectations and higher yields are currently pulling gold in different directions, and the latter appears to be the case. Prevailing. Gold may be trending sideways for now, but rising inflation expectations would likely lead to gold gains later in the year.”
Spot gold fell a whopping 1.7% to $ 1,817.49 an ounce, its lowest level since December 2, before making up for losses to $ 1,836.76 at 10:57 a.m. in Singapore. The price fell 3.4% on Friday, the most since November 9. Silver, platinum and palladium all declined as the Bloomberg Dollar Spot Index rose 0.4%.
Meanwhile, in American politics, Parliament will pass a resolution this week accuse Donald Trump of his actions to encourage the crowd that stormed the Capitol, speaker Nancy Pelosi said. At the same time, the president is planning one challenging last week in office, according to people familiar with the case.