Gold prices in the international markets fell today (March 31, 2021) to its lowest in over 3 weeks owing to higher US treasury yields and gains in the dollar, setting the yellow metal on course of its biggest quarterly drop in more than 4 years.
Spot gold has now breached $1700 levels and by 0438 GMT traded down by 0.3 percent to $1679.41. During the month, gold has shed 3 percent, while on a quarterly basis the drop has been over 11 percent. U.S. gold futures were down 0.4% to $1,679.10 per ounce on Wednesday.
Meanwhile, back home on the MCX gold for April delivery was marginally up at Rs. 43900 per 10 gm
"Gold looks vulnerable today and I mostly put it down to the U.S. dollar's strength seen overnight," said OANDA senior market analyst Jeffrey Halley. The dollar index surged to its highest in close to 5 months against rival currencies and was on course of its best monthly performance since November 2016.
Also the US treasury yield traded close to a 14-month high hit in the earlier session. Higher returns on bonds increase the opportunity cost of holding non-yielding bullion.
"Logically speaking, the amount of stimulus coming on should drive inflation expectations higher and that should be positive for gold," said Howie Lee, an economist at OCBC Bank."But at the same time, they cannot be adequately absorbed by the market and it drives yields higher and also bolsters sentiment, which is negative for gold."