20 JULY 2021

Bidenflation as Government Spending Increases

Gold prices increased steadily on Monday after a brief drop below the $1,800 mark, regaining 1.2% ($21/oz) from its low. Gold prices were supported by U.S bond yields dropping to a five-month low of 1.17%. Lower yields reduced the opportunity cost of holding gold.


Increasing Covid 19 cases throughout the U.S amplifies fears of a pandemic resurgence. The highly contagious Delta variant continues to drive panic throughout the stock markets, however, gold holds true as a tried and tested safe-haven alternative in times of political and financial uncertainty. 


President Biden’s multi-billion-dollar infrastructure plan faces a key deadline this week, even though the bill is still incomplete. Inflation fears have put the bill at risk. Republicans are arguing that the exuberant government spending will increase inflation and cause a Bidenflation surge, hitting working-class families the hardest. President Biden attempted to calm these inflationary fears on Monday stating that the Whitehouse believes inflation will be “temporary” and that his multi-billion-dollar spending plan will reduce inflation.


In other gold news, the Brazilian Central Bank increased their gold reserves by 52.7% in one month with a purchase of 41.8 tons in June, increasing the Brazilian gold reserves to 121.1 tons – their largest purchase in 21 years. 


The yellow metal was last seen trading at $1,817/oz.

Jaco Lups