Meanwhile, US Treasury yields held close to one-year highs, and the dollar began the week firmly as US economic strength and a faster vaccine rollout drew investors into the greenback.
“Yields are the big threat to gold in the near term,” Michael McCarthy, chief market strategist at CMC Markets, told Reuters. “If the sell-off in bonds gathers momentum, gold could fall below $1,700 very quickly,” he added.
Further weighing on gold, Asian equity markets inched higher as the chance of yet more trillions in US fiscal spending underpinned the global growth outlook.
Market participants are now waiting for US President Joe Biden’s infrastructure spending package on Wednesday, which is speculated to be in the $3-$4 trillion range.
“While gold is still good for inflation, the problem is, it’s not good right now because yields are going higher in concert with inflation,” said Stephen Innes, chief global market strategist at financial services firm Axi.
“We need those yields to stop going higher, and then you know, once the inflation takes over then gold goes up.”
(With files from Reuters)
