Review of EGU Price for the Last Month
Statistics from the past 31 days showed that the EGU prices have risen by less than 1% on 20 days and increased between 1% to 7% across 11 days. EGU prices hit above 6% for two days, namely on 8 and 28 March.
Market News Recap
March has been a stressful month for gold as it struggled for a rebound in prices, only to succumb to strong US Treasury yields and a rising US dollar. At the start of the month, inflation pushed US Treasury yields higher, preventing gold prices from going up.
In the second week of March, gold prices recovered above the psychological USD 1,700 mark. However, they could not break higher than USD 1,760, which is the current benchmark for gold to prove bullish, according to the Business Times. Despite the passing of the USD 1.9 trillion stimulus package by Congress, strong bond yields continued to add pressure to gold prices.
In the following week, gold prices managed to rise as a result of higher inflation due to stimulus measures. In addition, the US Federal Reserve promised to keep interest rates near zero as the US tries to sustain its economic recovery.
However, the sudden fall of the Turkish lira dealt a new blow to gold prices near the end of March. Turkey unexpectedly decided to replace its central bank governor—a move that plunged the lira down by 15 percent. This caused investors to seek refuge in the US dollar and bonds.
Despite the struggles that gold is facing, CPM Group’s Annual Gold Yearbook stated that gold would experience more medium- and long-term gains this year. The Group believes that the pandemic will continue to exacerbate existing problems, such as slow economic growth, debts, and budget deficits. Besides, recovery is a long road—vaccine rollouts have been met with logistical challenges, especially in rural areas. There also looms the possibility of a fourth wave of Covid-19 infections. These issues will support gold prices in the coming months.
In addition, analyst Steve Dunn, head of exchange-traded products at Aberdeen Standard Investments, observed that while bond yields are rising, the US central bank will step in to ensure they do not rise beyond 2 percent in order to control the rise of interest rates and the US dollar.
Meanwhile, very loose fiscal policies will give gold a further boost. The Group also predicts that deteriorating US-China relations will drive investors towards gold as a safe haven. These factors could bring gold back up to USD 1,995 per ounce this year, says Rohit Savant, vice president of research at CPM Group.
1. Headwinds from the dollar and bond yields buffet gold – The Business Times
2. CPM Group: The pandemic ‘changed the world’ and gold price will reap the benefits – Kitco
3. Aberdeen Standard Investments: Gold prices can still rise to $2,000 as rising bond yields force Fed action – Kitco
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