Gold Prices Recover after Biden's Inauguration

Gold prices recovered their losses after dropping $20 ahead of the inauguration of Democratic President Joe Biden amid extremely tight security in the wake of the pro-Trump violence on Capitol Hill.

Silver also dropped after Donald Trump left Washington, as the first president to abound the inauguration of his successor since the mid-nineteenth century.

However, Gold traded back at $1,870, and the London bullion spot silver price regained half of its 50% drop, back above $25.35 an ounce.

"As Biden prepares for his first 100 days in office, there may be a slump in gold prices ahead of us," said French investment bank and London bullion market maker BNP Paribas.

Markets are currently trading on sentiment, the bearish narrative and the optimistic outlook presented by the new US government.

After declining in the pandemic crisis last March to its lowest level in 10.5 years, silver became the best performer between precious metals in 2020, with gains throughout the year of 48%.

"Gold prices will return to $2,000 an ounce "probably by the middle of the second quarter when a large number of people are vaccinated and there is a lot of cash in the system with demand almost returning to normal," according to OCBC's economist Hui Lee.

Also, borrowing costs for the Biden administration, with its new $1.9 trillion stimulus plan, remained steady at 1.10% per year on the 10 years Treasury yields.

Gold could definitely drop to $1,200 an ounce, once the quick vaccination and trade war between the US and China subside. However, any turmoil with Iran or in the Middle East could shift the price of gold above its highest level last summer of $2,000.