Dollar rally runs out of puff as yields ease

Marco Green
January 13, 2021

Platinum rose 0.3% to $1,079.21, while palladium eased 0.2% to $2,388.78.

A big question in this latest dollar move is how much was mechanical. It rose 0.1% to 90.418 on Monday.

With Asian stock markets also lower, MSCI's gauge of stocks across the globe shed 0.65% after closing at a record high on Friday.

In the worldwide market, Spot Gold was steady at $1,845.19 per ounce as Asian stocks traded lower (ahead of Indian market's opening), dragged by political unrest in Washington and rising global COVID-19 cases, outweighing a firmer dollar and US Treasury yields.

Expectations of a multitrillion-dollar stimulus plan and the belief the Federal Reserve will not act to counter rising interest rates, along with new Treasury supply are helping yields rise, said Gennadiy Goldberg, an interest rate strategist at TD Securities in NY.

Further, benchmark Treasury Yields held firm at 10-month highs as investors adjusted for higher government stimulus under the Joe Biden administration, helping the dollar rebound, weighing on gold's gains.

The spread between the 2-year and 10-year Treasury yield brushed against 100 basis points to hit its steepest since July 2017.

"The glory days of gold are over", said Stephen Innes, chief global market strategist at Axi.

The euro steadied at $1.2208 and dollar index was steady at 89.991 on Wednesday after falling 0.5 per cent on Tuesday.

Morgan Stanley recommended a neutral view on the dollar and closed a dollar-bearish trade versus the euro and the Canadian dollar, according to a note published last week.

The US dollar is the worst performer today after a strong six-day run.

Spot gold rose 0.2% to $1,858.56 per ounce by 0255 GMT, while USA gold futures gained 0.9% to $1,860.10.

Against the euro, it posted its sharpest daily fall in more than a month and it dropped more than 1 per cent against the pound, which was also boosted by the Bank of England governor talking down the prospect of negative rates.

Bitcoin last fell 17.49% to $31,498.43.

Other reports by Click Lancashire

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