Gold futures aimed for a modest rebound Thursday, a day after rising U.S. bond yields undermined a rally in bullion which doesn’t offer a coupon.
However, commodity dealers are betting that the longer-term outlook for gold is higher, with a Democratically controlled Congress likely to champion greater fiscal spending, which is bullish for gold prices.
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 Joe Biden’s appointments and legislative agenda.
Gold, however, appeared to see fairly muted moves, even as four people died as protesters violently occupied the U.S. Capitol, challenging the peaceful democratic transfer of power from President Donald Trump to Biden, with rioters alleging, without evidence, voter fraud and other unfounded election improprieties.
“Moreover, the Democrats’ success in Georgia should make it easier for Joe Biden to put his agenda in place and initiate more fiscal stimulus. Investors reacted by betting on more riskier assets than gold and the price declined to $1,900 before the riots in Washington generated a recovery to $1,930,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades in a daily note.
February gold was headed $11.10, or 0.6%, higher at $1,919.70 an ounce, after tumbling 2.3% in the prior session.
Meanwhile, silver for March added 21 cents, or 0.8%, to trade at $27.25 an ounce, following a 2.2% drop on Wednesday.
Wednesday’s slide for precious metals came as the 10-year Treasury yield note 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 was hanging around Wednesday’s peak, which may draw some demand away from gold and silver.