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Gold: Another Week, Another Struggle at $1,900

Published 06/11/2021, 03:44 PM
Updated 06/11/2021, 03:45 PM

By Barani Krishnan

Investing.com - The gold speculator, whether bull or bear, may have found the perfect play for now: Buy at near $1,850 and sell well before $1,900.

The $40 to $50 target for each trade may seem like a dumbed-down way to trade gold when a myriad of chart signals and the intersection of Treasury yields and the dollar should be setting the course.

Yet, a look at the weekly fluctuations on Comex since mid-May suggests that the former would have generated more wins than any artsy-fancy strategy involving multiple hedges.

As the week rolled to a close, an all-too familiar pattern reinforced itself on those who still cared to call gold a hedge against inflation — which it clearly was not, given its inability to respond to America’s worst concerns about price pressures in more than a decade.

The front-month gold futures contract on New York’s Comex settled at $1,879.60 per ounce, down $16.80, or 0.9%. For the week, it was down $12.40 or 0.7%.

The high for the week was $1,906.15 while the low was $1,871.95 — keeping within the $30 to $50 range of the past month.

The spot price of gold, reflective of real-time trades in bullion, was at $1,876.65 by 3:45 PM ET (19:45 GMT), moving between the day’s peak of $1,903.01 and bottom of $1,874.65.

Already in a steady rut since its late Thursday return to $1,900 pricing, gold took a decisive turn lower after Friday’s release of the University of Michigan’s closely-followed Consumer Sentiment for June, which came in at 86.4, versus expectations for 84.2 and the May reading of 82.9.

That nudged the 10-year Treasury yield to 1.454%.

The bigger damage to gold probably came from the somewhat inexplicable rebound in the dollar — although the greenback also did not get too far, with an intraday high of 90.61.

Phillip Streible, precious metals strategist at Blueline Futures in Chicago, said the logic-bending move in the dollar did not make Friday’s trade in gold any easier.

“It’s the same mind-numbing thing each week,” said Streible. “Between gold, the dollar and yields, you have three different plates spinning at the same time, and you’re trying to decide which one to go with — when none really is appealing for now.”

Latest comments

The primary tenet of investing is don't fight the Fed. I am long but this feels wrong. It shouldn't be this hard to catch a bid.
Funniest and best quotas of the month by Phillip Stieble: “ The logic bending move in the dollar “ Lmao- the fed is at work in every market. There is no logic whatsoever.
70s-style inflation: Biggest risk is 'invisible wealth destruction,' gold price going to $20K this decade
Monday buy or sell
Good Day How are you? hope everything is fine with you and your family Thanks for all your time, efforts and continuous support in the form of great Analysis. Kindly please advice whether G7 versus China conflict could create cold war and Basil 3 decision against US$ could loosen Gold bulls to rage on. would again Gold drop further till 1870 first or would atleast test 1900 first before dropping. My buys are strucked from 1913-1903. Am very tensed and not sure at what level i should sell hedge. Be Safe take care and have nice time with your family, friends and loved ones.   Thanks & Regards, Asad
we're going to have a repeat of 2013 gold going to 1,200 because of interest rate.
System will collapse with intrest rate hikes unless there is major inflation permanent
Imagine the size of inflation bubble in the stock market and bond market if there were no crypocurrency for the helecopter money to flow to!!!!
Monday buy or Sell?
sell 🐻
Yup, Fed did this. They did all their bond buying right before the inflation print. They are not the referee anymore. They are the player.
Federal Reserve rigged price of gold it's not a real price. Federal Reserve wanting strong dollar and the time inflation very hay. very dirty manipulation
King Tolba. Of course Fed is all manipulating to keep Gold suppressed and the dollar above 90, however Fed is not alone in the conspiracy. Greedy Wall Street is also in the game. They engineer the sell off and buy the lows but won't let the retail traders succeed either way. It will continue to be like this only. This is a new normal now.
Monday buy or sell ?
"As the week rolled to a close, an all-too familiar pattern reinforced itself on those who still cared to call gold a hedge against inflation — which it clearly was not, given its inability to respond to America’s worst concerns about price pressures in more than a decade." I think you are wrong to suggest this is gold diverging. Gold is up $200 from recent lows this year which can be attributed to inflation fears, gold being a hedge against dollar weakness as you know. See today's articles on investing for other ideas why the USD has rallied and how inflation fears appear to be subsiding, at least according to reports this week. US growth appears stronger than in the EU. The UK reopening in two weeks may be delayed and that is helping dollar bulls also. Two articles: Dollar looks stronger as euro and sterling dip By Reuters (investing.com) Stocks hover near record highs as bond yields slide By Reuters (investing.com)
AIM, it's well and fine to extrapolate gold's $200 from this year's lows as a response to inflation. But the fact of the matter is, inflation concerns were already flying high by January, and if goal had properly reflected that, It should have never gotten to $1700, and worse $1600 levels, in Q1. Pardon me, but I'm so done with this gold-is-an-inflation hedge nonsense for now. Let's get a good move up before we start talking about that again. Have a good one, sir.
Nice ...but you forget to say that inflation for Michigan says were in 4% from target on 4.7% ....double of FED target near 2% (this sugests if we go more higher, in september FED meeting we will take another surprise),  like 2012 uptrend that gold touched  1780 and started big fall run to 1040 on 2015 ^^      ................. Thanks for your hard work ^^
ha ha ... priming the data, you are, I see. There are so many of this year-ago inflation numbers being thrown around that I think the market is beginning to get desensitized to the whole thing. That probably explains why "transitory" and "transient" have gone mainstream. We can thank Powell for adding to the Fed lexicon. Have a good one, mate!
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