Gold is on a downtrend in the London trading session today as investors increase their risk appetite due to bullish momentum from the U.S dollar bolstered by a decline in the spread of the COVID-19 Delta variant.
Gold futures is down 0.37%, currently trading at $1,804.75 an ounce. Gold is down 1.33% from last week’s high of $1,829 an ounce. The dollar index, which usually moves inversely to gold, is up 0.04% for the day, currently trading at 93.015, a trading zone it has not traded in the last 3 months. Benchmark 10-year U.S. Treasury yields also bounced off five-month lows.
Reasons for gold’s bearish trend
Investors’ fears and worries are at ease because the number of COVID-19 cases has declined significantly in over half of the U.S. in the last two weeks. The U.S is now averaging about 52,600 new cases a day, a 26% decline from two weeks ago. With the decline in the number of cases, an increase in economic activity in the country is expected thereby pushing investors to take on more risk, other than investing in the yellow metal.
In Asia, the Bank of Japan (BOJ) released the minutes from its latest policy meeting. It revealed that many BOJ policymakers were worried that an uptick in global commodity costs will push the country’s inflation rate but some argued that weak consumption will keep any upward pressure limited. The country also released its trade data earlier in the day and it showed positive results. The country’s exports grew 48.6% year-on-year, which represents a fourth consecutive month of double-digit gains and the country’s imports grew 32.7% year-on-year in June.
In Switzerland, the Swiss customs data was released yesterday and it revealed that although exports of gold to India edged higher in June, it remains far below levels seen earlier in the year, while shipments to China fell.
Investors now await reports from the European Central Bank (ECB) and Bank of Indonesia on their respective policy decisions. The report is expected to be released tomorrow.
In other precious metals, silver is up 0.87%, currently trading at $25.21 an ounce, palladium is up 0.84%, currently trading at $2,662.50 an ounce and platinum is up 0.74%, currently trading at 1,073.5 an ounce.