Gold was not much changed as US Treasury yields rebounded.
Yields are rising again, and US President Joe Biden on Thursday signed a US$1.9 trillion COVID-19 pandemic relief bill into law, allowing aid to flow to individuals, businesses and local governments.
Meanwhile, applications for US jobless benefits fell more than forecast to the lowest since early November last year as COVID-19 vaccinations accelerated and states eased more business restrictions.
Photo: EPA-EFE
DEMAND AFFECTED
Rising yields have played havoc on the price of gold, which touched a record high in August. Rates have climbed as increased economic aid stokes inflation concerns, hampering demand for bullion because it does not offer interest.
Prospects for faster economic growth are also denting demand for the metal as a haven, helping send prices down more than 9 percent this year.
“Bond vigilantes continue to view the massive Biden US$1.9 trillion stimulus bill with deep dread concern, both with massive supply in the pipeline as well as inflation pressures,” said Tai Wong, head of metals derivatives trading at BMO Capital Markets. “Selling in bonds is keeping yields elevated and has taken gold rather smartly off overnight highs.”
POTENTIAL TAILWIND
While the roll out of COVID-19 vaccines has seen diminishing investor interest for the traditional haven, Biden’s economic package could give a huge “tailwind” to gold in the long term, Commerzbank AG analyst Carsten Fritsch said.
“The inflation risks are growing at the same time, as handing out US$1,400 to nearly every American and topping up and extending unemployment benefits are likely to massively fuel consumption,” Fritsch said.
The European Central Bank pledged to ramp up buying government debt in coming months in a bid to a contain rising bond yields that threaten to derail the region’s economic recovery.
Spot gold added 0.1 percent to US$1,723.75 an ounce, up 1.69 percent for the week. Gold for April delivery declined US$2.80 to US$1,719.80 an ounce, but rose 1.25 percent from a week earlier.
Other commodities:
‧ Silver for May delivery fell US$0.28 to US$25.91 an ounce and May copper remained unchanged at US$4.14 a pound.
Additional reporting by AP and Reuters, with staff writer
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