Gold Prices Melting Fast amid Expected Rise in Inflation

Gold traders are momentarily shorting the metal that has already suffered its second straight weekly decline amid a strong rebound in the greenback’s value overshadowing the yellow metal’s appeal as an inflation hedge after the U.S. Joe Biden proposed a new $1.9 trillion COVID-19 support program a few days ago.

In addition, the U.S dollar value against all odds printed impressive gains coupled with recent upticks in U.S. Treasury yields, lead gold futures in moderating below $1,825/ounce at press time.

Also, what seems to be taming gold bugs presently is the greenback’s sudden rise which is applying downward pressure on precious metals taking into consideration the US Dollar Index that is used in tracking the dollar strength against a basket of major currencies rallied above its 3 week high.

It’s vital to note, gold prices had been under pressure in the month of January amid growing sentiments revealing global investors preferred to hold the US dollar despite the Federal Reserve Chair Jerome Powell’s recently issued dovish statements saying interest rates would not rise in the near future.

That said, what is also weighing hard on gold prices is the US Treasury yields, on the account that has the price higher, it will limit gold’s gain in the near term U.S Treasury yields have a higher chance of more upsides, which could likely pose a big gold problem.

Recent price actions suggest gold traders are caught between longer-term buying of the hard safe-haven asset on the back of expected rising inflation, massive quantitative easing programs in play or shorting the bullion asset arbitrarily as the value of the greenback recovered amid rising cases of viral infections in Western Europe and United States.