Monthly change: XAUUSD -7.87%
Gold's loss in February was the worst in four years. The drop came on the back of bets that the U.S. economy might perform better than the Federal Reserve's expectations for the second half - diminishing the need for so-called safe havens like gold.
The precious metal had a rocky start to the year. The higher Treasury yields weighed on demand for the non-interest-bearing metal, and the rollout of vaccinations worldwide spurred optimism about a recovery from the pandemic. For decades, gold has been touted as the best store of value and protection against any loss in the dollar's purchasing power.
Nevertheless, gold may rise on expectations that Treasury yields have peaked for the time being. Investors may view any deep corrections of prices due to short-term fluctuations as buying opportunities. The U.S. is heading for more budget deficits and a higher debt-to-GDP ratio from the continuous fiscal battle against the Covid-19. This might be the time to hedge in gold for traders.
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