Daily Gold Market Report

Gold’s Unexpected Rebound:
How It Overcame Higher Yields and a Strong Dollar

(USAGOLD – 2/21/2024) Gold prices are unchanged in early trading Wednesday. Gold is trading at $2028.06, up $3.65. Silver is trading at $23.01, up 1 cent. Despite a backdrop of higher bond yields, a stronger US dollar, and no major escalation in geopolitical tensions in the Middle East—conditions typically unfavorable for gold—the precious metal demonstrated resilience in early 2024. Gold’s dip below $2000 per ounce was short-lived, as it quickly rebounded, indicating strong buying interest even at historically high levels. David Scutt of City Index suggests this rebound has potential for further gains, particularly as the US dollar rally shows signs of fatigue amid rising inflation expectations. The inverse relationship between gold and the US dollar index (DXY) has been notably strong, hinting at a weakening dollar providing a tailwind for gold prices. Additionally, market-based inflation expectations are rising, which could further support gold as a hedge against inflation. Despite the adverse macro environment and volatility following US economic reports, gold’s recovery to its previous trading range suggests a bullish outlook, with buying opportunities on pullbacks towards $2008 seen as offering favorable risk-reward scenarios.