FX.co ★ Dollar depreciates, while gold rises amid falling yields on US government bonds

Gold futures climbed on Wednesday which was influenced by the decline in the yield of US government bonds. Recall that the price of gold fell on Tuesday against the background of the speech of Fed Chair Jerome Powell regarding monetary policy. Powell said before the Senate Banking Committee that the US economy is already showing noticeable signs of recovery, but the Fed still intends to continue its soft policy in the future. This statement influenced the fact that April gold futures sank 0.1% in value.

However, on Wednesday, the opposite scenario is observed as the precious metal is trading mostly in positive territory. The main driver of this growth is the decrease in the yield of US Treasury bonds from the maximum levels in February last year. A decrease in the yield on government bonds affects the dollar rate, and a weaker dollar turns the precious metal into the most profitable asset for holders of another currency. The promise of global regulators to continue to adhere to accommodative monetary policy increases the appetite of market participants for riskier assets, which puts the US dollar in an even more disadvantageous position. As a result, the dollar index against a basket of six major currencies sank 0.15%, to 90.051, and the cost of the April gold futures on the Comex stock exchange added about 0.60%, reaching $1,807.08 per troy ounce.

Dollar index

Gold future

March silver futures also showed an increase in quotes by 0.07%, to $27.71 per ounce.

The term for the recovery of the US economy, according to the head of the regulator, remains extremely unclear. The country's economy is still far from the targets set by the regulator for employment and inflation, therefore, achieving significant progress is likely to take a lot of time. And this intention of the Federal Reserve to maintain a soft and patient monetary position in the long term and determine the beginning of the decline in the yield of Treasury government bonds. This background became favorable for gold quotes, which stabilized and eventually recovered from larger losses.