Gold price rebounded above the $1,700 level on Tuesday, as it gained respite from a retreat in US Treasury yields and the dollar following a slide to a 10-month low in the last session.
Spot gold rose 1.8% to $1,714.89 per ounce by 11:25 a.m. EST, but was still trading near its lowest since early June 2020. US gold gained 2.1% to $1,713.70 per ounce in New York.
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“Given the metal’s zero-yielding nature, falling yields may provide a tailwind for bulls to elevate prices higher,” Lukman Otunuga, senior research analyst at FXTM, told Reuters.
But while gold may extend gains near term, “fundamentally, the pendulum swings in favour of bears, especially when factoring in how global sentiment is improving on vaccine rollouts and covid-19 cases are falling globally,” Otunuga added.
Gold’s current move “is a short-term bounce and not a reversal of the bigger trend,” said analyst Xiao Fu at Bank of China International. The exchange-traded fund outflows are indicating diminishing investor interest, she added.
On Monday, holdings of the world’s largest gold-backed ETF, SPDR Gold Trust, fell to their lowest since April 2020.
(With files from Reuters)