Gold price remains flat on Monday amid rising ADB bond yields and stronger dollar as investors await Federal Reserve policymakers to speak out to learn when the central bank might cut k support during the pandemic.
“The price of gold appears in a long period of recession”
Spot gold was trading at $1,753.29, up 0.22% daily at the time of writing, while December US gold futures rose 0.13% to $1,753.85. Cryptocoin. com
As we reported , benchmark 10-year US Treasury yields, which lower the attractiveness of gold by raising the opportunity cost, hit the highest level in nearly three months. The dollar also strengthened, increasing the pressure on the gold price. Independent analyst Ross Norman comments:
The gold price looks to be in a prolonged recession and can’t let go either way, with stronger 10-year Treasury yields and a strong dollar acting as a headwind.
The focus of the market will be the speeches of a number of Fed officials this week, including Chairman Jerome Powell, who will testify before Congress on the central bank’s policy response to the pandemic.
Citigroup: Next year we are in a bearish trend for spot and futures gold markets
Gold is often considered a hedge against higher inflation. However, the Fed’s rate hike will increase the opportunity cost of holding non-interest-bearing gold. Ross Norman says central bank purchases have been encouraging to the market, but bullion has been lacking in quality institutional flows, particularly from North America. Holgs of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose marginally on Friday, after hitting the lowest level in more than a year earlier last week.
In the meantime, investors are following the developments surrounding the debt-ridden China Evergrande, after the real estate giant failed to pay its bonds on time last week. Stephen Innes, managing partner of SPI Asset Management, said that the People’s Bank of China continues to inject liquidity into the markets, citing some systemic risks in the market and providing some support for bullion.
Analisdollarser at Citigroup, on the other hand, offer their price predictions for the price of gold next year, with a bearish outlook:
We are in a bearish trend for the spot and futures gold markets, with an average of below $1,600 in 2022.