Gold futures are inching higher late in the session on Tuesday as a weaker U.S. Dollar drove up foreign demand just enough to underpin the dollar-denominated asset. Prices could rise further into the close because March 10-year Treasury notes have reversed to the upside and are currently in a position to close higher for the session. For those who don’t know, Treasury have an inverse relationship with yields so this means yields are falling today.
Earlier in the session, gold prices eased in choppy trading that earlier saw it climb as much as 1% as a surge in U.S. Treasury yields outweighed support from bets on higher inflation as Washington rolls out more stimulus.
Some traders speculate that gold’s underperformance since August, 2020 is unlikely due to the rise of bitcoin.
The second week of the new year has been less favorable to gold as prices dropped well below $1,900 an ounce amid the higher U.S. dollar and U.S. yields. February Comex gold futures were last at trading at $1,849.50, down 0.07% on the day.
The yield on the U.S. 10-year Treasury note rose to its highest levels in nearly a year on Tuesday, last trading at 1.169% as investors became more risk-on in light of the Blue Senate outcome, which forced markets to price-in more stimulus.
I believe that the possibility of a short term U.S. dollar rebound due to risk aversion should be utilized to add to gold investments. Gold should be bought at $1,850 and half the positions below $1,750 over the next few months.
With record global debt and MMT in place, there is more certainty that it is about time that gold will reprice itself to account for dollar debasement. When faith in the modern monetary system is shaken, there is a tendency to shift towards hard assets, probably justifying why central banks across the globe have been net buyers of gold bullions since the Global Financial Crisis.
Earlier in the session, gold prices eased in choppy trading that earlier saw it climb as much as 1% as a surge in U.S. Treasury yields outweighed support from bets on higher inflation as Washington rolls out more stimulus.
Some traders speculate that gold’s underperformance since August, 2020 is unlikely due to the rise of bitcoin.
The second week of the new year has been less favorable to gold as prices dropped well below $1,900 an ounce amid the higher U.S. dollar and U.S. yields. February Comex gold futures were last at trading at $1,849.50, down 0.07% on the day.
The yield on the U.S. 10-year Treasury note rose to its highest levels in nearly a year on Tuesday, last trading at 1.169% as investors became more risk-on in light of the Blue Senate outcome, which forced markets to price-in more stimulus.
I believe that the possibility of a short term U.S. dollar rebound due to risk aversion should be utilized to add to gold investments. Gold should be bought at $1,850 and half the positions below $1,750 over the next few months.
With record global debt and MMT in place, there is more certainty that it is about time that gold will reprice itself to account for dollar debasement. When faith in the modern monetary system is shaken, there is a tendency to shift towards hard assets, probably justifying why central banks across the globe have been net buyers of gold bullions since the Global Financial Crisis.
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