Gold edged up, recovering from an almost seven-week low, amid caution in markets as investors assessed the outlook for the dollar and the timeline for a U.S. stimulus package.
European equities and U.S. futures were under pressure. Global shares slipped last week after optimism about the $1.9 trillion U.S. aid package, and the so-called reflation trade, faltered into a long weekend, with U.S. markets shut Monday for a holiday. Bullion recovered from earlier losses “amid broad risk-off sentiment,” said Margaret Yang, a strategist at DailyFX.
Bullion has fallen more than 3% this year as U.S. Treasury yields and the dollar climbed on hopes that Covid-19 vaccines and more fiscal stimulus will aid an economic recovery. Inflation expectations have increased steadily since March, though too slowly to compensate for the recent spike in bond rates, diminishing gold’s appeal in what has typically been a strong month for the metal in the past decade.
Spot gold added 0.3% to $1,833.81 an ounce by 1:32 p.m. in London, after earlier falling as much as 1.3% to the lowest since Dec. 1. Silver and platinum edged higher, while palladium was little changed. The Bloomberg Dollar Spot Index rose 0.2%.
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