Dollar rises as Treasury yields stabilize

The dollar saw gains on Wednesday, recovering some of its early morning losses, as US Treasury yields stabilized after rising to year-highs.

Venture currencies like the Australian and New Zealand dollars were down after posting substantial gains on Tuesday. Bitcoin fell after touching $55,000 for the first time since February 22.

The euro depreciated 0.5% at $1.18940 after rebounding from a three-and-a-half-month low of $1.18355 on Tuesday.

Against the yen, another traditional safe-haven currency, the greenback traded 0.2% higher at 108.68 yen, declining after climbing to a nine-month high of 109.235 yen.

The greenback has closely followed the rise in US Treasury yields in recent weeks, which has boosted the currency’s appeal as well as weighing down general investor sentiment.

The 10-year Treasury yield stabilized around 1.54% on Wednesday after a three-day drop from a year-long high of 1.6250%.

Investors are on the lookout for February inflation figures to be released by the United States later in the day.

Traders are also concerned that bond yields may rise further because this week, the market must absorb $120 billion in auctions of 3-year, 10-year, and 30-year US Treasury bills.

The dollar index strengthened 0.2% to 92.147 units in Asian trading on Wednesday, after falling sharply from a three-and-a-half-month high of 92.506 units in the early morning. In the morning, it was trading 0.1% higher at 92,027 units in the European businesses.

Gold dropped on the dollar advance

Gold prices fell on Wednesday after posting their most significant jump in two months in the last session, as high Treasury debt yields and the dollar’s advance remain substantial obstacles for the precious metal. Spot gold was down 0.1% at $1,714.23 an ounce after gaining more than 2% on Tuesday. Gold futures in the United States were down 0.3% at $1,711.50 an ounce. 

Silver was down 0.3% at $ 25.82 an ounce. Meanwhile, palladium fell 0.1% to $2,295.35 an ounce; and platinum was stable at $1,168.32 an ounce.

The US House of Representatives cleared the way for a $1.9 trillion fiscal stimulus bill to be reviewed in plenary on Wednesday. The plan proposed by President Joe Biden is expected to pass.

Rohit Savant, The vice president of the market research company CPM Group, stated that investors in gold should not be nervous. Although nominal bond yields are growing, real yields are going to remain negative for quite some time.

For this reason, CPM Group is optimistic about the evolution of gold price.