The prices of gold rose on Wednesday as the recovery of U.S. Treasury yields and the dollar slowed down. The benchmark 10-year yields dropped from a previous 10-month high and dragged the greenback down, which made the yellow metal less expensive and more attractive to investors using other currencies. President-elect Joe Biden’s plan to roll out trillions of dollars in stimulus package also boosted the bullion’s appeal as an inflation hedge.
Spot gold is currently trading at $1,855.73 per ounce as of 0910 GMT.
Kyle Rodda, an analyst with IG Market, commented that the new year remains a constructive one for gold. He cited the continuing downward trend of the dollar and the still negative real yields that makes the metal an attractive investment. But he expects some dips or short-term decline in gold prices as the market balances out. CMC Markets’ chief market strategist Michael McCarthy predicted that the bullion could face resistance at the $1,890-$1900 price range.
Meanwhile, Boston Federal Reserve Bank President Eric Rosengren predicted a strong economic recovery in the second half of 2021. He expects the monetary policy to remain accommodative.
The total number of COVID-19 infections has surpassed the 91 million mark and prompted several European and Asian countries to impose tighter restrictions to control the spread of the virus. The vaccination rates remain disappointing. In the U.S., the administration of President Donald Trump announced plans to release millions of vaccine doses that were previously allocated for second shots. It urged state governments to offer the vaccines to older people and those with chronic health conditions.
Still on Trump, he appears to have lost control of his party after showing no remorse for inciting a mob attack on the Capitol. Republican Senate Majority Leader Mitch McConnell said he believes that Trump committed impeachable offenses and expressed support for the Democrats’ efforts to impeach him. Liz Cheney, a high-ranking Republican leader in the House, added that there has never been a greater betrayal by a president of his office and his oath to the constitution. Cheney, Rep. John Katko (R-New York), Rep. Adam Kinzinger (R-Ill.) and Rep. Fred Upton (R-Mich.) said they would vote to impeach Trump.