Gold Price News and Forecast: XAU/USD dropped to two-month lows during the early North American session
|Gold plummets to two-month lows, below $1800 mark
The precious metal witnessed heavy selling for the third consecutive session on Thursday and was pressured by a combination of factors. The US Treasury bond yields continued scaling higher amid firming expectations for a massive US fiscal spending, which, in turn, drove flows away from the non-yielding yellow metal.
The US bond yields rose further following the release of better-than-expected US Initial Weekly Jobless Claims. Positive US economic data, along with the progress with coronavirus vaccinations lifted hopes for a strong economic recovery and benefitted the US dollar. This was seen as another factor weighing on the dollar-denominated commodity.
Will interest rate increase cause Gold to plunge in 2021?
The decline in the real interest rates is the most important downside risk for gold. Will it materialize, plunging the price of the yellow metal?
The rise in inflation is the most significant upside risk for gold this year, but there are also a few important downside risks. The most disturbing for us is the possibility that the real interest rates will increase. Why? Please take a look at the chart below.
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