Gold prices rise with weak dollar and US bond yields

  • 19 October, 2021
  • 3:13 pm EEST

Gold prices rose on Tuesday, with weak dollar and US bond yields, which provided some support for the precious metal as central banks moved towards easing economic stimulus.

Gold prices ended their trading on Monday with a decline, deepening their losses, to be the second daily decline in a row.


Gold Prices Today

By 08:10 AM GMT (11:10 AM GMT), the gold futures contract for December delivery rose 0.097 percent, to $1,782.90 an ounce.

The spot price for the yellow metal also rose by 0.96%, recording $1781.82 an ounce.

The dollar index, which measures the US currency against a basket of 6 currencies, and is moving in reverse with gold prices, hit its lowest level in two weeks, making bullion cheaper for buyers in other currencies.

The benchmark 10-year US Treasury yields also weakened, reducing the opportunity cost of non-yielding bullion, Reuters reported.


Price Forecast

“Although gold is range-bound, if it settles above $1,760, it could rise to $1,782, possibly even $1,800,” said ABC Bolton’s global general manager Nicholas Frabel.

He added that a break below $1,759 could push it to $1.737 – $1,741.

He noted that people aren’t convinced enough to go long in gold, and macro investors for example don’t seem convinced to buy more gold to hedge against inflation.

He explained that the scaling back of stimulus by central banks was “just a fact of life”.

On the other hand, Bank of England Governor Andrew Bailey said on Sunday that the Bank of England is preparing to raise interest rates as inflation risks mount.

Gold is often considered an inflation hedge, although lower stimulus and higher interest rates tend to increase government bond yields, increasing the opportunity cost of non-yielding bullion.


Economic Growth

“Economic growth is taking a hit, and if risky assets start to show a correction, gold will shine bright,” said Kunal Shah, head of research at Nirmal Bang Commodities, Mumbai.

He added that gold could reach $1850-$1860 by the end of November, and bullion could rise even if yields move higher.

US factory production fell last September as persistent global chip shortages slashed auto production, another sign of supply constraints hampering growth.


Metal Prices

The price of silver futures contracts – for December delivery – increased by 2.11%, to reach $23.76 an ounce.

The spot platinum price increased by 1.72%, recording $ 1057.19 an ounce, and the spot palladium price rose by 3.06%, recording $ 2079.85 an ounce.

Russia’s Nornickel, the world’s largest palladium producer, said on Monday it had started a competition for scientists to find new ways to use the metal, hit by a shortage of chips, in the auto industry, its largest consumer sector.


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