Tuesday night, spot Gold and silver rose further, spot gold rose to expand to 2%, spot gold rose above $1720 / ounce, back up $40 from the day’s low; early in the U.S. session, spot silver continued to rise, on $26 / ounce, up 3.61% during the day.
At the same Time, the 10-year U.S. bond yields fell sharply, down more than 3% during the day, back to 1.53%; the dollar index also fell significantly, once fell below the 92 mark during the European session.
Analysts point out that spot gold and silver may only rally briefly because the 10-year U.S. bond yields have fallen back. Traders remain wary of the possibility of further increases in yields this week. Over the next two days, traders will need to keep an eye on two major risk events that could impact gold prices.
The first thing gold traders need to watch for next is the $1.9 trillion stimulus bill. U.S. House Speaker Nancy Pelosi said Monday that the House will consider a $1.9 trillion economic bailout plan by President Joe Biden on Wednesday (March 10). Only after the House approves it will it be signed into law by Biden.
The plan has previously passed the Senate, but the Senate removed the federal minimum wage increase to $15 per hour; and lowered unemployment benefits from $400 to $300, with a one-week extension until Sept. 6. Like the Senate, the Democrats did not have a clear advantage in the House, which meant they could not afford too many negative votes.
The initial version of the bill passed the House without any Republican votes, and two moderate Democrats joined Republicans in voting against that version. Rep. Bonnie Watson Coleman, a House Democrat, said she was “disgusted” by some of the changes in the Senate bill and expressed doubts about whether she would support it.
So, there is still some uncertainty about the stimulus bill.
However, more attention needs to be paid to this week’s U.S. bond auction, traders need to be alert to the possibility of a further spike in U.S. bond yields. Starting Tuesday local time, the U.S. Treasury will launch a new round of $120 billion in Treasury auctions, including $58 billion in three-year U.S. bonds, $38 billion in 10-year U.S. bonds and $24 billion in 30-year U.S. bonds, to be sold at 1 p.m. local time on Tuesday, Wednesday and Thursday (i.e., 2 a.m. BST on Wednesday, Thursday and Friday).
ING strategists Chris Turner, Francesco Pesole and Petr Krpata said in their daily research note that U.S. CPI data and U.S. bond auctions are the main risk events this week, with the former likely to have a negative spillover effect on the latter, exacerbating the sell-off in U.S. bonds.
If U.S. bond yields spike further, gold prices will come under pressure again. If U.S. bond yields rise further, gold prices could fall to $1,660, said Bart Melek, head of commodity strategy at TD Securities.
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