United States dollar under some modest pressure

  • United States dollar under some modest pressure

United States dollar under some modest pressure

On Tuesday, the relentless decline in gold prices paused after Democrats began the process of impeaching President Donald Trump for a second time on Monday. Rising coronavirus cases across Europe and China dragged down commodity stocks. Platinum rose 0.3% to $1,079.21, while palladium eased 0.2% to $2,388.78.

The pan-European STOXX 600 index lost 0.67%.

Gold prices touched a near six-week low on Monday, extending losses from the previous session, as a stronger dollar and higher US Treasury yields pressured the non-yielding bullion.

Expectations of a multitrillion-dollar stimulus plan and the belief the Federal Reserve will not act to counter rising interest rates, along with new Treasury supply are helping yields rise, said Gennadiy Goldberg, an interest rate strategist at TD Securities in NY.

The nominal yield on benchmark 10-year United States debt is up more than 20 basis points to 1.1187% this year, helping the dollar to rise to a one-month high of 104.20 against the Japanese yen.

At 103 basis points, the spread between the three-month and 10-year USA debt is at its steepest since late March and is approaching the 2020 highs of 123 bps.

"While the Dollars may catch a bid on position-adjustment or profit-taking after its recent weakness, a sustained recovery will have to be accompanied by either a clear improvement in recent yield trends or a positive US growth shock", said Shaun Osborne, chief currency strategist at Scotiabank.

Morgan Stanley recommended a neutral view on the dollar and closed a dollar-bearish trade versus the euro and the Canadian dollar, according to a note published last week.

The dollar index fell more than 0.2% to 90.30 points, after opening at 90.51 points, with an intraday high of 90.61 points.

When the dollar goes up, foreign demand for dollar-denominated gold tends to go down.

Commercial property prices fell almost 10% in 2020, according to the Green Street Commercial Property Price Index, although the hardest hit sectors saw declines of 15% to 25%. Silver fell 1.66% to $24.95.