Price of Gold Fundamental Daily Forecast – Supported by Stable Silver Prices but Capped by Rising Yields

Gold futures are edging higher on Wednesday, essentially mirroring the movement in the silver market. Helping to cap gains are a stronger U.S. Dollar and firm demand for riskier assets. Rising Treasury yields are also limiting demand for gold.

Traders are also monitoring the developments in Washington as there is growing optimism that Congress will approve President Joe Biden’s entire $1.9 trillion coronavirus relief package despite Republican opposition.

At 12:23 GMT, April Comex gold is trading $1836.50, up $3.10 or +0.17%.

Silver Prices Stabilize

Gold prices were steady on Wednesday as sliver prices stabilized after a fall of more than 8% in the previous session brought a social media inspired buying spree that began last week to an abrupt halt.

The trigger for Tuesday’s reversal was a hike in margins by the CME Group. Meanwhile, the buying spree left sliver dealers scrambling to find supplies for retail buyers, while one billion ounces of silver was traded in London on Monday.

Holdings in iShares Silver Trust, the largest silver-backed ETF, jumped by a record 57.8 million ounces, data showed on Tuesday.

Euro Hits Two-Month Low against Dollar

Helping to put a lid on gold prices is the stronger U.S. Dollar Index. The dollar index is moving higher on Wednesday, boosted by a drop in the heavily weighted Euro. The single-currency fell to a two-month low against the greenback, trading just above $1.20, as investors looked to a widening disparity between the strength of the U.S. and European pandemic recoveries.

The view was bolstered by moves in Washington toward fast-tracking more stimulus spending, in contrast with concerns about extended European lockdowns and expectations for a decline in Euro Zone growth this quarter.

Treasury Yields Rise as Democrats Push Forward with Stimulus

The 10-year U.S. Treasury yield held above the 1.1% mark early on Wednesday, as Democrats pushed forward with trying to pass President Joe Biden’s $1.9 trillion stimulus plan.

U.S. government bond yields advanced on Wednesday, after Democrats took their first votes in Congress on Tuesday night, to pass the proposed stimulus package without Republican support.

Higher-yields tend to be a negative for gold because the precious metals doesn’t pay interest.

Daily Forecast

There doesn’t seem to be a lot of positives for gold at this time, which may be a set up for a sneaky rally. Meanwhile, some are saying that gold could be a big winner if the turmoil continues in silver especially if the CME continues to keep silver margins high.

That’s it for the potential positives. As for the negative, it looks as if another uptrend is developing in Treasury yields. If the Biden stimulus package becomes law then the government will have to pay for it by selling bonds. Yields will have to go up to attract investors into U.S. Treasurys.

For a look at all of today’s economic events, check out our economic calendar.