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Gold Closes in On $1,800 After Strongest Week in 4 Months

CommoditiesApr 16, 2021 03:15PM ET
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By Barani Krishnan

Investing.com - Gold had its best week since December, with U.S. inflation risks and a reintroduction of political risk hedging helping set the yellow metal on a potential return to $1,800 pricing.

Benchmark gold futures on New York’s Comex settled up $13.40, or 0.8%, at $1,780.20 an ounce. It earlier scaled a seven-week high of $1,784.55, making its first return to $1,780 pricing since Feb. 26.

The spot price of gold wasn’t far from futures, trading up $13.79, or 0.8%, at $1,777.70 by 3:12 PM ET (19:12 GMT), after a peak at $1,783.83. Moves in spot gold are integral to fund managers, who sometimes rely more on it than futures for direction.

Gold’s resurgence this week came as U.S. bond yields plunged amid a hike in consumer prices that reasserted the yellow metal’s diminished role as a hedge against inflation.

Sweeping sanctions imposed on Russia by the United States on Thursday also brought gold back — in the eyes of some, at least — as a protection against political risk.

U.S. bond yields, measured by the 10-year Treasury note, hovered at 1.58% on Friday, markedly lower from a 14-month high of 1.77% on March 30.

“It would appear that the bond market is finally buying into the Fed’s low-for longer verse which would be supportive of non-yielding gold,” said Sophie Griffiths, research head for the U.K. and EMEA at online broker OANDA.

Gold has been throttled in recent months by bond yields and the dollar that often surged on the argument that U.S. economic recovery from the coronavirus pandemic could exceed expectations, as the Federal Reserve kept interest rates at near zero.

Griffiths noted that geopolitics were also “back with a bang” this week amid the heightening showdown between world powers America and Russia, driving investors toward safe havens such as gold.

Adding to gold’s strength was a weaker dollar, which typically boosted the yellow metal. The Dollar Index, which pits the greenback against the euro and five other major currencies, weakened on Friday to 91.56 versus Thursday’s settlement of 91.62.

Gold had a scorching run in mid-2020 when it rose from March lows of under $1,500 to reach record highs of nearly $2,100 by August, responding to inflationary concerns sparked by the first U.S. fiscal relief of $3 trillion approved for the coronavirus pandemic.

Breakthroughs in vaccine development since November, along with optimism of economic recovery, however, forced gold to close 2020 trading at just below $1,900.

This year, the rut worsened as gold fell first to $1,800 levels in January, then collapsed to below $1,660 at one point in March.

Such weakness in gold is remarkable if considered from the perspective of the Covid-19 stimulus of $1.9 trillion passed by Congress in March, and the Biden administration’s plans for an additional infrastructure spending of $2.2 trillion.

Typically, stimulus measures lead to dollar debasement and inflation that sends gold rallying as an inflation hedge. But logic-suspending selloffs instead took place in gold over the past six months, with some Wall Street banks lending inane commentary to support these.

Gold Closes in On $1,800 After Strongest Week in 4 Months
 

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Comments (10)
Barani Krishnan
Barani Krishnan Apr 16, 2021 5:14PM ET
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To all our readers: On behalf of Investing.com, I apologize for the profusion of spam that has hijacked our chat forums, including the comment field of stories such as this. We have been working on the problem for some time and hope to have a solution soon. We appreciate your understanding and continued support of our service and its content. Thanks and bests -- Barani Krishnan, Senior Analyst, Investing.com
Meru Pet
Meru Pet Apr 16, 2021 5:14PM ET
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Barani Krishnan
Barani Krishnan Apr 16, 2021 5:13PM ET
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To all our readers: On behalf of Investing.com, I apologize for the profusion of spam that has hijacked our chat forums, including the comment field of stories such as this. We have been working on the problem for some time and hope to have a solution soon. We appreciate your understanding and continued support of our service and its content. Thanks and bests -- Barani Krishnan, Senior Analyst, Investing.com
Stan Smith
Stan Smith Apr 16, 2021 3:28PM ET
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Wait til June!
Barani Krishnan
Barani Krishnan Apr 16, 2021 3:18PM ET
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To all our readers: On behalf of Investing.com, I apologize for the profusion of spam that has hijacked our chat forums, including the comment field of stories such as this. We have been working on the problem for some time and hope to have a solution soon. We appreciate your understanding and continued support of our service and its content. Thanks and bests -- Barani Krishnan, Senior Analyst, Investing.com
Barani Krishnan
Barani Krishnan Apr 16, 2021 1:55PM ET
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To all our readers: On behalf of Investing.com, I apologize for the profusion of spam that has hijacked our chat forums, including the comment field of stories such as this. We have been working on the problem for some time and hope to have a solution soon. We appreciate your understanding and continued support of our service and its content. Thanks and bests -- Barani Krishnan, Senior Analyst, Investing.com
Mehmet Aksarayli
Mehmet Aksarayli Apr 16, 2021 1:55PM ET
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Hi Barani Gold has breake 1760 barrier and heading north to 1800s just as you predicted beginning of this week. Any idea Whats waiting for us next week? Thank you for time have lovely weekend
Barani Krishnan
Barani Krishnan Apr 16, 2021 1:55PM ET
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Hello Mehmet, hope all's well with you. Yes, we seem to be getting to $1,800 and no telling what happens after that: $1,900 and on forth, or back to $1,700. It has to be a blow by blow account.
shayan amirian
shayan amirian Apr 16, 2021 1:55PM ET
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hello.how can we have a ********by ********account?
shayan amirian
shayan amirian Apr 16, 2021 1:55PM ET
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*****by *****"
shayan amirian
shayan amirian Apr 16, 2021 1:55PM ET
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b.l.o.w
Barani Krishnan
Barani Krishnan Apr 16, 2021 1:50PM ET
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To all our readers: On behalf of Investing.com, I apologize for the profusion of spam that has hijacked our chat forums, including the comment field of stories such as this. We have been working on the problem for some time and hope to have a solution soon. We appreciate your understanding and continued support of our service and its content. Thanks and bests -- Barani Krishnan, Senior Analyst, Investing.com
Barani Krishnan
Barani Krishnan Apr 16, 2021 1:43PM ET
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To all our readers: On behalf of Investing.com, I apologize for the profusion of spam that has hijacked our chat forums, including the comment field of stories such as this. We have been working on the problem for some time and hope to have a solution soon. We appreciate your understanding and continued support of our service and its content. Thanks and bests -- Barani Krishnan, Senior Analyst, Investing.com
Barani Krishnan
Barani Krishnan Apr 16, 2021 1:32PM ET
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To all our readers: On behalf of Investing.com, I apologize for the profusion of spam that has hijacked our chat forums, including the comment field of stories such as this. We have been working on the problem for some time and hope to have a solution soon. We appreciate your understanding and continued support of our service and its content. Thanks and bests -- Barani Krishnan, Senior Analyst, Investing.com
Alvin Frias
Alvin Frias Apr 16, 2021 1:30PM ET
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hola
 
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