Gold Inches Higher as Dollar and Yields Fall

Gold Inches Higher as Dollar and Yields Fall


Precious metal prices kicked off the week on a stronger note as investors search for a hedge for inflation. The significant rise in consumer and producer price index in the United States, in addition to the soaring inflation expectations, forced investors to search for a hedge to sustain their purchasing power as the Federal Reserve looks reluctant to act. The US real yields moved lower as the US Treasury yields declined and inflation expectations rallied, boosting the demand for gold. The price of a gold ounce rose to $1855, the highest since February, the price of a silver ounce advanced to $27.77, while palladium held steady near $2900.


The dollar index, which measures the greenback against a basket of major currencies, held near 90.30, after a significant selling round on Friday. The soft economic data out of the United States is signaling that the Fed will continue with its current policy path until something substantial happens, which could either be soaring inflation, or a clear economic recovery. The EURUSD rose to $1.2151, the GBPUSD rallied to $1.4119, and the USDJPY weakened to 109.20.


Major US stock index futures started the week on a soft note after rallying for two consecutive days to the end of the week. The rising inflation expectations are worrying investors. On the other hand, the weaker than anticipated economic data from the United States and China indicates that the full economic recovery could take more time than expected. The Dow Jones Industrial Average futures fell to 34155, the S&P500 futures dipped to 4151, and Nasdaq futures dropped to 13330.


Oil prices traded sideways during the early trading hours of the week as investors reassess fundamentals. Colonial pipelines stated that oil flow is back to normal. Meanwhile, Taiwan and Singapore could be suffering to stop a new COVID19 wave, which would weigh on the prospects of oil demand recovery. West Texas Intermediate crude June contract held near $65.40, and Brent blend July contract traded near $68.70.

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