Gold price rose today, rebounding from a near six-week low touched in the previous session, as stocks slipped on political turmoil in Washington and the slow pace of Covid-19 vaccinations across the world.
Spot gold rose 0.8% at $1,860.10 per ounce by 0724 GMT. On Monday, prices touched their lowest since Dec. 2. U.S. gold futures gained 0.5% to $1,860. We are seeing a technical rebound in gold after investors booked some profits in the last two sessions, said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.
Asian stocks eased from record highs as Democrats in the U.S. House of Representatives barrelled towards impeaching U.S. President Donald Trump in the wake of Capitol siege last week and on rising COVID-19 cases. “The macro picture is still positive for gold,” Nicholas Frappell, global general manager at ABC Bullion said, adding in short-term gold is still vulnerable to dollar sentiment and yields.
Benchmark 10-year Treasury yields held at 10-month highs, helping the dollar and making gold expensive. Higher bond yields increase the opportunity cost of holding the non-interest yielding gold. Global coronavirus infections stood at more than 90 million as countries struggle with the pace of vaccinations.
“Gold looks underpriced at current levels. The new (virus) strain reminds us of the fact that 2021 may not be materially different from 2020 if the world doesn’t get the vaccine fast enough,” said Howie Lee, an economist at OCBC Bank. The Federal Reserve will be cautious about the timeline of tapering, Lee said, even as money markets have increased bets it would start unwinding its asset-purchase programme by the end of the year.