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The price of gold futures fell today to $ 1,730. Affected by the appreciation of the dollar. And rising US government bond yields.
At 22.20 Thai time, the gold contract on the COMEX (Commodity Exchange) market is delivered in April. Minus $ 2.20, or 0.12%, at $ 1,728.70 / oz.
The rebound in yields on US government debt. The opportunity cost of losing gold will increase. Because gold is an asset that has no return in the form of interest.
Analysts say a rally in US Treasury yields will entice investors to buy bonds. While selling gold To adjust investment portfolios in the security asset pool
Also, a stronger dollar reduces the attractiveness of gold. By making gold contracts more expensive for holders of other currencies.
Yields on US Treasuries rose above 1.67% to hit a new 13-month high before the Federal Reserve announced the results of its monetary policy meeting today.
Markets keep an eye on Fed Chairman Jerome Powell’s press conference after the meeting. To catch the Fed’s signal on rising US Treasury yields now.
The 10-year US government bond is the benchmark bond used for global bond pricing. This includes the interest rates on home loans. And US auto loan interest rates that if government bond yields go up It will cut money on consumer spending. As the cost of paying interest on the loan increases. And companies will face higher costs for debt repayments. This will make these companies reduce their investment. And reduce the payment of dividends to investors.
Mr. Powell’s statement this time is important. Because investors are concerned that a rebound in US government bond yields and inflation figures point to a sharp rise. It can push the Fed to end monetary easing policy. After previous estimates that the Fed will keep interest rates close to 0% for the next few years.
Investors worry that inflation will rise as a result of the government of President Joe. Biden adopted a $ 1.9 trillion stimulus package.
The Fed previously signaled a slowdown in stimulus by lowering its bond purchase limit following a quantitative easing (QE) in 2013, which led the Fed to reduce the injection of money into the economy. This sparked a panic on Wall Street and global equity markets that crashed sharply during the year.
Pantheon Macroeconomics chief analyst Ian Shepherdson said he would be surprised. If Powell signals, the Fed will now intercept the rally in US Treasury yields.
Shepherdson believes Powell will seek to ease concerns about market inflation. But it won’t say that the Fed will lower its QE limit because Powell did. It will lead to an immediate surge in US government bond yields, which will aggravate equity markets that are concerned about a rally in US Treasury yields.
Also, Mr. Shepherdson said. Powell’s absence today will signal a change in monetary policy. It’s appropriate because America’s economic recovery is still uncertain. And it’s just a market forecast.
– Infoquest Translated and edited by Kongkiat Kor Virakiti Tel. 02-2535000 Email: [email protected]–
