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Gold Steadies After Two-Day Gain as Stimulus, Inflation in Focus


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© Bloomberg. A gold bar on display in a shop window in the Gold Souk in the Deira district of Dubai, United Arab Emirates, on Wednesday, Feb. 10, 2021. While silver’s jump to an eight-year high on Feb. 1 benefited many long-standing bulls on Wall Street, shop owners thousands of miles away in Dubai’s Gold Souk were far less euphoric. Photographer: Christopher Pike/Bloomberg

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(Bloomberg) — Gold steadied after advancing for two days as investors weighed the prospects of further U.S. stimulus and the latest reading on inflation.

Joe Biden’s $1.9 trillion Covid-19 relief bill cleared its final congressional hurdle Wednesday, with the House passing the bill on a 220-to-211 vote, sending it to the president to be signed, which he plans to do on Friday. Still, the partisan divide over the bill foreshadows the difficulty Biden will have in enacting the multi-trillion dollar, longer-term economic program he wants later this year.

Meanwhile, a key measure of U.S. consumer prices rose less than expected in February as costs of used vehicles, clothing and transportation services declined from a month earlier, suggesting broader inflationary pressures remain tame. This likely eased some concerns over economic overheating, given the sheer size of the overall stimulus package.

Bullion’s movements have recently been dictated by the dollar and bond yields, with the latter’s rise to the highest level in a year weighing on demand for the precious metal which doesn’t offer interest. Bets on rising inflation provided some support for gold as a hedge, but the overarching optimism over an economic recovery following the roll-out of vaccines has seen diminishing investor interest for the traditional haven.

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was little changed at $1,726.48 an ounce by 7:51 a.m. in Singapore, after climbing over the last two days to recover from a nine-month low touched earlier this week. Silver, platinum and palladium all dropped. The Bloomberg Dollar Spot Index was flat after falling 0.3% on Wednesday.

Meanwhile, 10-year Treasury yields hovered around the 1.53% level, as a lukewarm reception for the government bond auction Wednesday was taken in stride. Thursday’s $24 billion, 30-year bond auction presents the next test.

Also on Thursday, the European Central Bank holds its monetary policy meeting followed by a briefing by President Christine Lagarde. The ECB’s forecasts are likely to justify the current stimulus program with a cautious view that envisages no sustained jump in inflation, according to officials with knowledge of the matter.

©2021 Bloomberg L.P.

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