Gold Prices Rebound as Long-Term Interest Rates Drop

Gold prices rose by more than $35 an ounce from an 11-month low yesterday against the US dollar in Asian trade and London on Tuesday, reaching $1715.

Prices rose as Western government bonds also showed recovery, pushing long-term interest rates down from sudden highs in several years, despite this week's heavy release of new US debt to help finance spending on COVID's stimulus.

The decline in global prices continued to outpace prices in China, the primary consumer market for gold, where the record price of the Shanghai Gold Exchange today showed a premium of $14 an ounce, despite falling to the lowest value in 12 months at 355 yuan per gram.

According to data compiled by BullionVault, prices went up roughly $5 since Monday, as that premium provided the biggest incentive for new gold imports into China since August 2019.

The rise in the precious metal comes after it recorded its lowest settlement since April 2020, under pressure from the high yields of bonds to their highest levels in more than a year, which fell in today's trading.

The yellow metal also received support with the US dollar retreating from its 3-and-a-half-month high.

Upon settlement, the price of gold futures contracts for April delivery rose by 2.3%, or the equivalent of $38.90, to reach the level of $ 1716.90 an ounce.

The spot price of the yellow metal rose by 2 percent, or the equivalent of $34.68, to reach $1717.91 an ounce.

During the same period, the US dollar index, which measures the currency’s performance against 6 major currencies, fell by 0.3% to 92.04.