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Gold futures staged a partial rebound on Thursday, day after rising U.S. bond yields prompted the metal, which doesn’t offer a coupon, to post its first loss in six sessions.
Commodity dealers are betting that the longer-term outlook for gold is higher, with a Democratically controlled Congress likely to champion greater fiscal spending to reflate the economy which is bullish for gold prices.
Congress worked through the night to certify Democrat Joe Biden as the winner of the presidential election, and “with the Georgia run-off going the way of the Democrats for both seats, this theoretically opens the door to a stronger stimulus programme than hitherto,” said Rhona O’Connell, head of market analysis, EMEA and Asia, at StoneX.
Still, gold and silver prices are trading well off the peak prices seen on Wednesday “in what looks very much like ‘buy the rumour, sell the fact’,” trade, she said in Thursday commentary.
February gold GCG21, +0.34% GC00, +0.34% was up $7.90, or 0.4%, at $1,916.20 an ounce, after tumbling 2.3% in the prior session.
Meanwhile, silver for March SIH21, +0.77% added 20.3 cents, or 0.8%, to trade at $27.245 an ounce, following a 2.2% drop on Wednesday.
Democrats Jon Ossoff and Raphael Warnock won both Senate runoff races in Georgia, giving the party control of the Senate and easing the path for President-elect Biden’s appointments and legislative agenda.
Gold’s moves also come as news emerged that four people died during the violent occupation of the U.S. Capitol Wednesday, challenging the peaceful democratic transfer of power from President Donald Trump to Biden. Rioters alleged, without evidence, voter fraud and other unfounded election improprieties.
Wednesday’s slide for precious metals came as the 10-year Treasury yield note TMUBMUSD10Y, 1.082% hit a peak near 1.06%, marking its highest level since March. Higher yields can undercut appetite for safe-haven gold, which doesn’t offer a coupon.
The yield on Thursday topped Wednesday’s peak, which may draw some demand away from gold and silver.
Among other metals traded on Comex, March copper HGH21, +1.40% climbed by 1.5% to $3.706 a pound, looking to score another finish at its highest since 2013.
April platinum PLJ21, +1.30% added 1.2% to $1,123.90 an ounce, but March palladium PAH21, -0.72% shed 0.6% to $2,434 an ounce.
