Last week, gold came under pressure as U.S. Treasurys climbed to an eight -week high, detracting from the appeal of bullion. However, gold enthusiasts insists that uncertainty about the economic landscape fostered by the COVID-19 pandemic make bullion a solid long-term bet, particularly as countries spend trillions to support their economies.
On Monday, Treasury yields were slipping, with the 10-year Treasury note rate TMUBMUSD10Y, 0.688% at 0.69% and a gauge of the U.S. dollar against a half-dozen currencies, the ICE U.S. Dollar Index DXY, -0.28%, off 0.1%. Gold benefits from lower yields because it doesn’t offer a coupon and a weaker dollar can make bullion more attractive to users of other currencies.
Some experts view gold and silver’s recent pullback from a recent powerful uptrend as consolidation ahead of its next phase. Gold suffered a sharp pullback on Tuesday that helped to snap a weekly win streak.
“We will have a new bullish signal with a clear surpass of $1,965, in a scenario that remains dominated by coronavirus news and fears of further lockdowns,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades in a note. “Expectations for further actions by central banks remain ever present and this is another supportive element for gold. A fresh decline below the support zone of $1,920-$1,930 would denote weakness.”
Indeed, the People’s Bank of China on Monday injected fresh liquidity into its financial system while it kept the rate steady at 2.95% on a one-year medium term lending facility $100.74 billion while it deals with the effects of the viral outbreak, Reuters reported.
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