Markets and Delta variant – Gold price at three week high

Markets

Investors are concerned about slower economic growth, in contrast to how stock traders reacted earlier this year when they were concerned about rising inflation and the economy heating up. The FOMC minutes, which were released on Wednesday, warned of increased uncertainty in the future. Economists predict that the economy will grow by an annualized 9% in the second quarter of 2021 before slowing in the following months.

Coronavirus Delta Variant

The global increase in cases of the Delta variant is also raising alarms and fueling concerns about the global economic recovery. The Olympics prohibited spectators from attending the summer games in Tokyo because Japan has declared a state of emergency to combat the coronavirus outbreak.

Gold 

Positive sentiment toward gold resulting from rising uncertainty has helped the precious metal trade near its three-week high. Remember that gold is regarded as a safe haven asset, which means that an increase in uncertainty forces investors to turn to gold to hedge their risk. This is what we see right now.

It is also worth noting that lower treasury yields reduce the opportunity cost of holding the non-interest-bearing asset, causing gold prices to rise. Similarly, the dollar index, which is inversely related to the price of gold, fell 0.3%, pushing the spot price of gold to nearly $1,806 per ounce.

The dollar index fell 0.3%, and 10-year Treasury yields remained near more than four.