Price of Gold Fundamental Daily Forecast – Pressured as U.S. Treasury Yields Climb to 14-Month High

Gold futures are down sharply at the mid-session on Tuesday, sliding more than 1% before stabilizing. Pressuring prices were a jump in Treasury yields to a 14-month high and a surge in the U.S. Dollar Index to a four-month peak. The catalyst driving yields and the greenback were expectations that speedy vaccinations would improve the economic outlook, thus, reducing gold’s appeal as a safe-haven asset.

At 15:41 GMT, June Comex gold futures are trading $1685.40, down $29.20 or -1.70%.

Turkey’s Erodgan Repeats Call for Citizens to Convert Forex, Gold Holdings

On Monday evening Erdogan repeated his call on Turks to convert their foreign exchange and gold holdings into Turkish Lira assets. But that may not be enough to prop up the Lira as long as investors fear that political pressure will deter the central bank from tightening policy to curb inflation.

10-year Treasury Hits 14-Month High as Investors Prepare for infrastructure Push

The U.S. 10-year Treasury yield rose Tuesday and hit a 14-month high as coronavirus vaccine rollouts and planned infrastructure spending boosted expectations of a broad economic recovery and rising inflation.

The yield on the benchmark 10-year Treasury note jumped to 1.749% at 13:15 GMT. It hit 1.776% earlier in the session, the first time trading around that level since January 2020. The yield on the 30-year Treasury bond rose to 2.432%.

The rise in yields comes a day ahead of President Joe Biden revealing details of his infrastructure plan. The recovery package will include up to $3 trillion in spending across a swathe of sectors in an effort to bolster the U.S. economy.

Meanwhile, the pace of COVID-19 vaccinations in the U.S. is rising, with the Centers for Disease Control and Prevention reporting that over 3 million doses had been administered for three straight days, as of Sunday. However, coronavirus cases are also rising, with more than 63,000 new daily infections reported in the U.S., based on a seven-day average of Johns Hopkins University data.

Dollar Gains as U.S. Recovery Bets Stoke Treasury Yields

The U.S. Dollar gained against major currencies on Tuesday and climbed to a one-year high against the Japanese Yen, as accelerating U.S. vaccinations and plans for a major stimulus package stoked inflation expectations and raise Treasury yields.

The safe-haven dollar found support across the board as investors also digested the fallout from the collapse of highly leveraged investment fund Archegos Capital.

Daily Forecast

The move higher in yields comes amid increasing talk of inflation, as the U.S. economy starts to bounce back.

Unigestion Investment Manager Olivier Marciot said in a note Tuesday that he believes there is a “risk that inflation pressures will be less transitory than expected, increasing the odds of the Fed sitting ‘behind the curve’ and later being forced to change course more rapidly than projected.”