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PRECIOUS-Gold eases as dollar strengthens on stimulus hopes

Published 2021-01-11, 10:33 a/m
© Reuters.
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* Silver falls as much as 4.2%

* Dollar hits near three-week peak

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa (Updates prices)

By Shreyansi Singh

Jan 11 (Reuters) - Gold eased on Monday, having touched a six-week low earlier in the session, clamped down by a firm dollar and a rise in U.S. Treasury yields on hopes of more fiscal stimulus.

Spot gold XAU= was down 0.1% at $1,846.61 per ounce by 2:08 p.m. EST (1908 GMT), after touching its lowest level since Dec. 2 at $1,816.53.

U.S. gold futures GCv1 , meanwhile, settled up 0.8% at $1,850.80.

"We've seen a little rebound in the dollar, a slight pickup in yields and as a result we have seen some commodities markets, including the metals, pull back," said David Meger, director of metals trading at High Ridge Futures.

A "quiet period" prior to the inauguration of the Joe Biden administration in Washington and the Democratic agenda being put forward on interest rates, liquidity and stimulus are also weighing on the metals, Meger added.

The dollar index .DXY scaled a near three-week peak, helped by gains in the U.S. 10-year Treasury yield US10YT=RR . US/ USD/

"If the yield curve becomes steeper and differentials become much wider, expect to see a strong recovery in the dollar despite the new billions in expected stimulus," Kitco Metals senior analyst Jim Wyckoff said in a note.

President-elect Biden said on Friday that Americans need more economic relief from the coronavirus pandemic now and that he will deliver a plan costing "trillions" of dollars on Thursday. gold has generally been seen as a hedge against the inflation and currency debasement that could result from widespread stimulus, especially last year, that has changed as higher bond yields increase the opportunity cost of holding non-interest-yielding bullion.

Elsewhere, silver XAG= fell 1.4% to $25.02 per ounce, having earlier hit a near one-month low of $24.30.

Silver "should continue moving in gold's slipstream", Julius Baer analyst Carsten Menke said in a note.

Platinum XPT= dropped 2.6% to $1,037.50 per ounce while palladium XPD= was steady at $2,370.53.

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