Gold Price Analysis: XAU/USD buyers can ignore soft weekly open below $1,775
Gold prices bounce off the intraday low of $1,772.67 to currently around $1,774.22 during the early Monday morning in Asia. The bullion offered a gap-down weekly open of $1,774.45 after closing near $1,776 on Friday. Even so, the precious metal stays near to the multi-year high of $1,789.28 flashed earlier in the month.
Be it the surge in the US coronavirus (COVID-19) cases or the global policymakers’ rush to keep their economies afloat, the pandemic has hit the macro finances so hard that rush to risk-safety increased off-late. Also adding to the market’s risk aversion could be the geopolitical tension between the US and China, as well as Beijing’s tussle with India and some of the developed economies.
Gold to continue drawing strength from negative US real yields
Gold, a zero-yielding safe-haven metal, has gained 17% so far this year. The negative real or inflation-adjusted US Treasury yields seem to have power gains in the yellow metal and could continue to support the uptrend in the near term, according to Holger Zschapitz, senior editor at the economic and financial desk of the German daily Die Welt.
As seen above, gold has rallied from $1,450 to $1,789 over the past three months, while the US 10-year real rates have declined from 0.60% to -0.73%. Negative real yields essentially represent inflation or a decline in purchasing power and gold is a hedge against inflation.
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