Gold Bugs Struggle to Find their Feet, amid a Weak Greenback

The yellow metal is currently looking to find its feet around the $1825 price levels amid strong sell-offs sighted in the past few days.
Although the recent weakening in the greenback on doubts over the pace of the US economic recovery continues to offer support for gold bugs in staying above the $1,825/ounce price level.

In addition, gold bears seem to be rising their heads up on reports that reveal the ramping up of COVID-19 vaccinations globally is successfully taming the upsurge in COVID-19 viral attacks thereby limiting gold’s advance.
A key macro also weighing deep on the price of the precious metal remains its arch-enemy the US Treasury yields that have risen to their highest levels since 11 months on Friday, while U.S inflation expectations ticked up to a 6-year high.

Usually higher inflation boosts the precious metal but also lifts its arch-enemy (U.S Treasury yields), which in turn increases the opportunity cost of holding the safe-haven asset momentarily.

Such data could weigh on gold in the mid-term as recent price action reveals the most formidable support for the precious metal has now being reviewed downward to the region at $1,750/ounce price level.

Though hope is not lost for gold bugs yet, as recent price actions suggest the greenback continued to drift lower on a continuation of last week’s theme after disappointing US inflation alongside dovish comments from US Central Bank weighed heavily on US dollar broader sentiments.

Bottom line: that being said the yellow metal currently trades in a range around support from $1.9 trillion stimulus program expectations coupled with recent weakness in the greenback and mixed economic data sighted from emerged markets is countered by continuing gold exchange traded funds outflows and improvement in curbing the COVID-19 situation and progress on the COVID-19 vaccines front.