Gold Brushes $1,730 High As U.S. Bond Yields, Dollar Wilt By Investing

By Barani Krishnan – Gold brushed highs of just above $1,730 an ounce on Thursday as U.S. Treasury yields and the dollar continued their retreat from recent highs.

Gold’s rally for a second straight day helped it rebound from its wrecking losses in two earlier sessions that dealt a severe setback to longs eyeing a return to $1,800 pricing.

In Thursday’s trade, on New York’s Comex settled up $12.80, or 0.8%, at $1,728.40 an ounce, after a session high at $1,731.05.

With Monday’s 1.8% jump, Comex gold has virtually recovered what it lost in the first two sessions of the week that hurtled the market to the $1,600 territory it had not visited since March 12. For the week, Comex gold was down just 0.2%.

The of gold not far from the spot contract in futures. At 2:28 PM ET (18:28 GMT), spot gold was up $42.33, or 2.5%, to trade at $1,727.59, catching up with its lag to the futures market in recent days. Moves in spot gold are integral to fund managers who sometimes rely more on it than futures for direction.

The , which pits the greenback against six major currencies, slipped below the key bullish level of 93. Yields on the U.S. also retreated to 1.68% from the week’s highs of 1.77%.

“Gold has a bottom in place,” said Ed Moya, U.S. markets analyst at online broker OANDA. “When the weaker dollar trade returns, this will likely coincide with a string of surging pricing pressures in the U.S. The consensus on Wall Street is still that inflation won’t materialize, but the risks are growing that it could.”

Gold had one of its best runs ever in mid-2020 when it rose from March lows of under $1,500 to reach a record high of nearly $2,100 by August, responding to inflationary concerns sparked by the first U.S. fiscal relief of $3 trillion approved for the coronavirus pandemic.

Breakthroughs in vaccine development since November, along with optimism of economic recovery, forced gold to close 2020 trading at just below $1,900.

Since the start of this year, the rut in the yellow metal has worsened despite the Biden administration issuing another Covid-19 relief of $1.9 trillion. The White House also unveiled on Wednesday President Joe Biden’s separate infrastructure spending plan for some $2 trillion.

In spite of the dollar debasement expected from all these relief measures, the greenback has rallied so far at the expense of gold, which strayed near bear market territory at least twice this month when it lost 20% from its August record highs.

Both the dollar and bond yields have surged this year on the argument that U.S. economic recovery from the pandemic could exceed expectations, leading to spiraling inflation as the Federal Reserve insists on keeping interest rates at near zero.

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