Gold tumbles amid Dollar strength, stable treasury yields
On Monday, the price of gold futures decreased as a result of a robust US dollar, stable US Treasury yields, and an inclination towards riskier investments. This came after gold had reached a multi-year peak of more than $2,000 last week due to concerns about the banking industry.
June Comex Gold futures are currently trading at $1994.00, which reflects a decline of $7.70 or -0.38% since 05:00 GMT. Similarly, XAU/USD is also down by $18.55 or -0.93%, trading at $1972.82. On Friday, the SPDR Gold Shares ETF (GLD) closed at $183.65, showing a decrease of $2.09 or -1.13%.
Despite the recent decline in gold prices, worries about the undercapitalization of US banks are expected to keep supporting them. While the market has almost priced in a stable interest rate at the May meeting of the Fed, gold is likely to receive continued backing from significant macroeconomic developments.
Although higher interest rates usually discourage investment in non-yielding bullion, the long-term apprehensions regarding the banking sector's stability and potential economic repercussions may continue to fuel demand for gold as a safe-haven asset.
Overall, investors seeking a secure haven during times of economic uncertainty and market volatility are likely to find gold appealing. In the short term, gold prices may be unstable due to a robust US dollar, unvarying US Treasury yields, and a preference for higher-risk assets, but the demand for gold in the long run is expected to remain strong.
Author
Usman Ahmed
Forex92
Usman Ahmed is a currency trader and financial market analyst with more than a decade of active trading experience.
