By Gina Lee
Investing.com – Gold was down on Tuesday morning in Asia, dropping to its lowest level in more than two weeks. Investors turned away from the safe-haven asset as the quickening vaccine rollout and the prospect of more stimulus measures in the U.S. saw the dollar strengthen and Treasury yields climb.
Gold futures were down 0.42% at $1,707.35 by 12:40 AM ET (4:40 AM GMT) after hitting $1,704, its lowest level since Mar. 12, earlier in the session. The gold contract also rolled over to the June 21 contract on Mar. 29.
"The primary weighing factor on gold prices is the continuous rise in the U.S. long-term yields," DailyFX strategist Margaret Yang told Reuters, adding that prices will constantly decline even as the yellow metal acts as an inflation hedge.
This decline in gold prices, "can be attributed to reflation hopes as this infrastructure plan will not only inject liquidity into the market, it'll actually pump money into the real economy... therefore, the economic outlook is brighter than before."
Longer-dated Treasury yields trended upwards amid expectations that U.S. President Joe Biden's infrastructure initiative, to be announced on Wednesday, could further bolster U.S. economic growth.
The strengthening dollar, which climbed to a one-year high against the yen on Tuesday, also exerted pressure on the yellow metal. Investors continued to monitor any potential fallout from the collapse of hedge fund Archegos Capital.
"Gold's consolidation is breaking and if downward pressure takes prices below the $1,700 level, it could get ugly fast... massive support throughout the pandemic has been the $1,670 level and if that doesn't hold, not much support is seen until the $1,600 level," OANDA senior market analyst Edward Moya warned in a note.
In other precious metals, silver fell 0.3% and platinum was down 0.3%. However, palladium inched up 0.1% after sliding 5.5% during the previous session.