Gold prices continued to fall on Tuesday, hit by a rising dollar and higher US bond yields.
The US government’s ongoing vaccination programme has buoyed hopes that the prolonged and economically-crippling restrictions imposed to limit the spread of Covid-19 will soon be lifted across the world’s largest economy.
President Joe Biden’s ‘Build Back Better’ has also triggered a shift in investor sentiment. The White House announced on Sunday that the $3trn (£2.2bn, €2.5bn) stimulus plan will be split into two legislative proposals, one debuting on Wednesday, the other in April.
The record splurge of infrastructure spending, in addition to this month’s $1.9trn American Rescue Plan, may well cause some to seek out gold as a long-term inflation hedge. In the more immediate term, however, the yellow metal has fallen with investor sentiment shifting away from safe-havens.
Indeed, precious metals in general suffered on Monday, after the 10-year Treasury yield once again climbed above 1.7 per cent and the US Dollar index (DXY) rose to an almost five-month high of 92.90. Gold fell by over 1 per cent, while palladium and silver sank by 5.2 and 1.6 per cent, respectively.
Gold’s travails are thought to have been further compounded by the fallout of Archegos’ $20bn forced liquidation on Monday.
By late-morning on Tuesday, spot gold traded down 1 per cent at $1,692, nearing its monthly low of $1,677.30.