Gold prices experienced a limited decline during trading on Monday, as the yellow metal maintained the gains it achieved last Friday despite the significant rise in both the US dollar and Treasury bond yields.
Gold Now In terms of trading, spot gold contracts dropped by 0.15%, equivalent to $5.2, to record $2,686.96 per ounce, maintaining its trading close to the highest levels it has seen in nearly a month, which it reached last Friday. At the same time, February delivery gold futures fell by 0.22%, or $6.30, to record $2,708.70 per ounce.
Gold Maintains Gains Despite Strong Dollar and Bonds The dollar index, which measures the performance of the US dollar against a basket of six other major currencies, rose by 0.36% to reach its highest level in two months at 110.176 points. Meanwhile, yields on benchmark US Treasuries for ten years increased by about 18 basis points to record 4.715%, the highest level in more than 14 months.
Yields on two-year Treasuries also rose by about 21 basis points to 4.417%. However, gold only experienced marginal losses despite the increased cost of holding it for investors holding currencies other than the dollar amid the record rise of the US currency.
What Helped Gold Maintain Its Gains? Gold remained supported by record demand for it as a safe haven in light of the uncertainty surrounding the upcoming US administration's policies, which has increased with the approaching inauguration of President-elect Donald Trump, scheduled for January 20. The proposed tariffs could ignite trade wars and inflation, creating a favorable environment for gold, which is widely viewed as a hedge against inflation.
However, the limited losses experienced by gold today came after a stronger-than-expected US jobs report on Friday suggested improvements in the labor market and a robust economy, bolstering expectations that the Federal Reserve may proceed at a slower pace in reducing interest rates this year.