30/04/2021
At midday in the Asian market on Friday, the price of gold futures hovered below US$1770. Due to the recovery of US bond yields, the price of gold fell to US$1,754.85 yesterday, a record low since April 15.
On Thursday, the U.S. 10-year Treasury bond yield rose to 1.684%, a new high since April 13, which has risen sharply from the 1.531% low of 1.531% hit last week. The price of gold also fell. On Thursday, it fell to US$1,754.85, which was more than US$30 lower than the day’s high of US$1,789.85.
Although Fed Chairman Jerome Powell has repeatedly reiterated that he will not reduce the scale of debt purchases in the short term, and emphasized that inflation is only temporary, it only temporarily calmed the market. Investors began to digest the new round of household welfare expenditures by US President Biden. Plans and rising inflation data.
Biden announced a $1.8 trillion "American Family Plan" for children, students, and families at the joint meeting of the Senate and the House of Representatives on Wednesday.
Although the White House said that part of the amount will be credited by increasing the tax rate of the wealthiest people in the United States to obtain additional taxes. However, it is widely expected that there is limited room for tax rate increases, so some funds still need to be resolved through bond issuance.
Analysts believe that the key for gold prices to resume their upward trend lies in whether U.S. bond yields will stop rising. Edward Moya, senior market analyst at Oanda, said, “In order for gold prices to eventually rise, we only need to see the bond market believe that even with strong economic data in the next few months, the Fed will continue to firmly maintain its easing policy.”
