Gold outlook remains bearish despite a positive weekly close
economictimes.indiatimes.comgold closed with a gain of 0.57% at $2036 Friday. The metal was up nearly 1% on the week. As per the macroeconomic data released Friday, China's new home prices — 70 City Index (January) slid for the eighth consecutive month in January. Germany's GDP contracted 0.30% in the 4Q as per the final reading, which matched the forecast. ECB's one-year and three-year CPI expectations stood at 3.30% and 2.50% respectively, almost in line with the exception.
Bond Index rebalancing
Friday's gains in gold were driven mainly by a dip in the US yields, especially long-term yields, which in turn were driven by month-end rebalancing of treasuries as investors focused on next week's supply and demand dynamics. Long-dated treasuries are likely to benefit as debt issued during the month is included in the bond Index, while debt with a maturity of less than a year drops out. Index change occurs at the last trading day of the month.
The ten-year US yields fell 1.93% Friday to settle at 4.247%, which amounts to a dip of nearly 1% on the week. In contrast, the two-year US yields, which are more sensitive to the monetary policy, fell only 0.57% to close at 4.68%, and were up by around 1% on the week.
Dollar Index — weighed down by risk-on sentiments
The US Dollar Index is being held back by a healthy risk appetite on corporate earnings. The Index was down around 0.30% on the week as it closed at 103.96.
Volatility in the currency market slid to a two-year low on risk appetite as traders wait for further clarity on interest rates
