Gold Rises to Eight-Session High With Dollar, Yield Gains Ebbing

(Bloomberg) -- Gold advanced to the highest in more than a week as gains in bond yields and the dollar abated.

Treasury yields edged down from a recent high, increasing the allure of bullion, which doesn’t earn interest. The dollar gave back early gains, making gold more appealing to investors holding other currencies. The ebb is taking place even as positive economic data shows rapid growth for U.S. businesses and jobs.

That’s “good news for gold,” according to Commerzbank AG analyst Carsten Fritsch.

Gold has been under pressure this year because of increasing optimism over the post-pandemic economic recovery in the U.S., which buoyed bond yields and the dollar. Investors fled bullion-backed exchange-traded funds, a major pillar in gold’s ascent to an all-time high last year, with holdings in ETFs dropping to the lowest since May.

Now, bullion could have new tailwinds ahead. If concerns emerge that the U.S. economy might overheat as a result of massive fiscal stimulus, “gold would be the big winner,” Fritsch said. Gold is in a “bottoming-out phase” with support at a low of $1,680 an ounce and an upper bound of $1,760 an ounce, he said.

Spot gold rose 0.9% to $1,743.17 an ounce by 3:40 p.m. in London, after touching the highest since March 25. Silver, palladium and platinum also advanced. The Bloomberg Dollar Spot Index fell, paring an earlier gain.

Gold could extend gains if it breaks above $1,750, said Stephen Innes, chief global markets strategist at Axi. Traders were also assessing comments by Treasury Secretary Janet Yellen, who reiterated her view that the $1.9 trillion U.S. pandemic-relief bill signed last month won’t stoke inflation, and suggested that low interest rates will continue to prevail in coming years.

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