Gold rises as rally in USA dollar, Treasury yields hits brakes

Gold rises as rally in US dollar Treasury yields hits brakes

Gold rises as rally in US dollar Treasury yields hits brakes

Worldwide coronavirus cases surpassed 90 million on Monday, according to a Reuters tally.

On Tuesday, the relentless decline in gold prices paused after Democrats began the process of impeaching President Donald Trump for a second time on Monday.

The pan-European STOXX 600 index lost 0.67%.

Gold prices edged up on Wednesday as the dollar pulled back and the U.S. Treasury yields traded lower, while the outlook of a massive U.S. fiscal stimulus further boosted the metal's appeal as an inflation hedge.

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.

Benchmark 10-year Treasury yields held firm at 10-month highs as investors adjusted for higher government spending, helping the dollar firm and making gold expensive.

The action along the curve meant the spread between the 2-year and 10-year yields steepened to an nearly four-year high of more than 103 basis points.

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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.

The view that inflation will return "seems to ignore what is happening in the commercial real estate market (and the price bubble set to burst in the residential housing market)", wrote David Rosenberg, chief economist and strategist at the Toronto-based Rosenberg Research.

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

The Japanese yen weakened 0.20% versus the greenback at 104.16 per dollar, while Sterling was last trading at $1.3522, down 0.30% on the day.

I've been contemplating the case for an extended dollar rebound and one of the big lines in the sand is the downtrend in USD/JPY.

The US dollar is the worst performer today after a strong six-day run.

Spot gold fell as much as 1.7 per cent to US$1,816.53 per ounce, its lowest since Dec 2, and was down 0.7 per cent at US$1,835.96 by 2.59am GMT. Silver fell 1.66% to $24.95.

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