Gold prices fall due to positive signs of America’s economic recovery
- 14th August 2020
- Posted by: Hakeem
- Category: Commodities
Gold prices fell on Friday morning at Asia’s trading session over positive signs of a U.S. economic recovery. Gold futures declined by 0.56% to $1,959.30 as of 05.09 GMT
The prospect of an economic recovery helped the U.S dollar to go up in value, while putting pressure on the precious metal. However, the postponement of talks surrounding COVID-19 stimulus measures in the U.S Congress capped gold’s losses.
In a note to Nairametrics, Stephen Innes, the Chief Global Market Strategist at AxiCorp, gave vital insights on the challenges that the yellow metal presently faces. He said:
“It has been a tumultuous week for the gold price, which is back to $1950 levels, having clawed back a good chunk of this week’s losses. The US dollar remains under pressure as investors are growing more skeptical of Congress’s willingness to pass a stimulus package.
“Still, it could be a challenge for gold markets to regain last week’s fame as more fixed income traders are willing to short bonds now, which complicates the bullish gold view.
“The question is whether the back up in yields is accommodation for this week 10-year and 25-year auction or a rethink on the curve.”
Given that nominal yield correlations have diverged a bit from bullion on the recent move, gold traders may prefer to let this week’s dust settle and see where real yields pivot to next week.