Gold Up, But Stimulus Hopes Capped by Higher Treasury Yields By

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© Reuters.

© Reuters.

By Gina Lee – Gold was up on Thursday morning in Asia, edging lower as firmer U.S. Treasury yields capped gains from a Democrat sweep in Georgia’s Senate runoff election that raised hopes for more stimulus measures.

were up 0.55% at $1,919.15 by 12:02 M ET (5:02 AM GMT), remaining above the $1,900 mark.

“The rise of 10-year bond yields after the Senate victory by Democrats in Georgia has pushed gold lower, because it’s extremely sensitive to the trajectory of yields,” OANDA senior market analyst Jeffrey Halley told CNBC.

The remained firm after rising above 1% for the first time since March on Wednesday, increasing the opportunity cost of holding gold.

However, the widely expected decline of the , usually moving inversely to gold, will give the yellow metal a boost. The greenback was down on Thursday.

“The dollar is going to depreciate all through 2021, U.S. yields may move slightly higher from here, but they’re not going to run away to the top side, in that environment gold should flourish,” OANDA’s Halley added.

Jon Ossoff and Raphael Warnock’s victory in Georgia also boosted gold prices. The Democrat pair are headed to the Senate after declaring victory over their Republican rivals David Perdue and Kelly Loeffler. With the election result giving Democrats control of the Senate, President-elect Joe Biden has a clear path through which to push his legislative agenda, including more stimulus measures, when his administration takes office on Jan. 20.

However, protests by supporters of President Donald Trump in Capitol Hill, where lawmakers were certifying Biden’s victory in the Nov. 3 elections, briefly raised concerns. Lawmakers have now resumed the process after being escorted back into the building.

Meanwhile, the Federal Reserve released the minutes from its December policy meeting on Wednesday, which showed that the central bank was nearly unanimous in its decision last month to leave its bond-buying program unchanged.