Gold prices perk up as government bond yields retreat

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Gold prices perk up as government bond yields retreat


Futures for gold on Monday were heading modestly higher as government bond yields were pulling back.

However, traders were looking ahead to a number of significant events that could influence longer-term trading, including data on the health of the U.S. economy, gross domestic product, on Thursday, and a Federal Reserve policy update on Wednesday.

“For certain, the metal is likely to see much higher volatility during this week, and the event that is likely to influence the gold prices the most will be the US GDP number,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a daily research note.

February gold
GC00,
+0.36%

GCG21,
+0.36%

were trading $10.20, or 0.5%, to $1,866.10 an ounce, after putting in a weekly gain of 1.4% on Friday.

Silver for March delivery
SI00,
+0.52%

SIH21,
+0.52%

was gaining 22 cents, or 0.9%, at $25.78 an ounce, following a 2.8% weekly gain.

Investors are awaiting more updates on prospects for a proposed $1.9 trillion coronavirus relief package from newly minted U.S. President Joe Biden, as well as further guidance from the Fed on its liquidity programs, which have been underpinning financial markets.

Meanwhile, bonds were catching a bid in Europe and that was spilling over in the U.S. market, with the 10-year Treasury note
TMUBMUSD10Y,
1.067%

rate at 1.06%. Bond prices rise and yields fall.

Government bonds were responding to signs of COVID fragility in Europe, with growing talk of double-dip recessions in the eurozone amid fears of longer-lasting restrictions to curb the spread of the deadly pathogen.

Falling bond prices can help lift gold prices because the commodity doesn’t offer a coupon.



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