GOLD Analysis
Gold has pulled back in price as interest rates on the U.S 10 Year treasury bond has increased due to expectations of fiscal spending by the incoming Biden administration.
With Biden expected to pump over $1 Trillion in additional spending, the increase in issued government bonds has caused the price of existing bonds to decline and pushed up the yield (Interest) rate on the bonds as a result.
The U.S Dollar has automatically strengthened, as the Interest paid on bonds affects the dollars overnight carry when comparing rates in two different countries.
Gold's long term prospects are still bullish, but more now, a rising dollar weakens gold as the commodity becomes more expensive when sold in dollars.
With Biden expected to pump over $1 Trillion in additional spending, the increase in issued government bonds has caused the price of existing bonds to decline and pushed up the yield (Interest) rate on the bonds as a result.
The U.S Dollar has automatically strengthened, as the Interest paid on bonds affects the dollars overnight carry when comparing rates in two different countries.
Gold's long term prospects are still bullish, but more now, a rising dollar weakens gold as the commodity becomes more expensive when sold in dollars.
Kayan Kalipha
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