Gold drops below $1,800 per ounce
The price of Gold dropped below the $1,800 price level at the fourth trading session of the week due to higher U.S. Treasury yields.
Gold was trading at the futures market at $1,796.40 per ounce at the time of filling this report.
Jerome Powell, chairman of the U.S Federal Reserves, maintained that the current ultra-easy monetary policy paused buying pressure on the precious metal’s appeal.
During his testimony before the House Financial Services Committee, he tried calming fears about inflation in the economy, emphasizing that he would only start worrying about it if prices began to rise in an aggressive and troubling way.
Higher inflation usually boosts the price of gold in principle, but also helps U.S Treasury yields (gold’s arch-enemy), which in turn helps the opportunity cost of holding the safe haven shinny asset.
Benchmark U.S. Treasury yields are currently at the highest levels in a year.
Further insights on the political macro condition that could determine the future of Gold, at least for the midterm since it is priced in the U.S dollar, was given by the Chief Global Market Strategist at Axi, Stephen Innes who said, “Gold broke below USD1,800/oz. Such a break below that level this month has done some psychological damage to the market, I believe.
“On the political side, President Biden’s incentives look fully aligned with getting the US economy and populations as healthy as possible ahead of the 2022 mid-term elections.
“If both fiscal and monetary policy makes maximum efforts into a post-pandemic recovery, then at the very least we will get temporary inflation along with plenty of debate whether it might become more permanent.