Gold prices soared to their highest levels in nearly two months today as a weakened dollar, coupled with lower US real yields gave the precious metal momentum to build upon its largest annual advance in almost ten years.
The rise in gold prices has been coinciding with the deterioration of the US dollar, which has plummeted to some of the lowest levels not seen since 2018. In fact, gains for the precious metal have been growing despite both US and global stocks being situated at all-time highs, as expectations of virus mitigation have fueled confidence in economic growth and corporate profits. In addition, gold prices have also seen support via revived inflows into ETFs, following an exodus in November and the beginning of December.
Furthermore, gold, which serves as a wedge against inflation during times of economic uncertainty, has been benefiting from significantly lower US real yields. The deterioration in real rates in being primarily driven by a rise in inflation expectations, as investors anticipate that increased monetary and fiscal measures, along with mass vaccine distribution will see gold prices continue their revival in 2021.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.