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Gold Down 3rd Week in Row, After Collapse to $1,600 Territory

CommoditiesMar 05, 2021 03:40PM ET
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By Barani Krishnan

Investing.com - Gold continued to seek meaningful support on Friday, posting a third straight weekly loss as it struggled to recover from a collapse to $1,600 levels triggered by a spike in U.S. bond yields and the dollar.

Gold for April delivery on New York’s Comex settled up $1.10, or less than 0.1%, at $1,701.80 an ounce. For the week though, it fell 1.5%, extending last week’s decline of 2.7% and the previous week’s drop of 2.5%. In Friday’s session, it fell to as low as $1,684.05 — the lowest price since April 2020 for a benchmark gold futures.

“It is possible we will see gold reach above $1,700 again in the near future but if it does, it will likely be brief and I would consider it a selling opportunity,” said Eric Scoles, analyst at Chicago’s Blueline Futures.

“This market is on track to keep going down and I expect to see it below 1600 with potential to drop further from there. Big picture: 2020 gave us one of the most bullish possible situations for gold but that is ending. We are recovering and money is going to move into assets where it will grow and gold prices will suffer.”

Spot gold, which reflects real-time trades in bullion, was up $1.53, or 0.1%, at $1,698.86, after a bottom $1,687.45 — its lowest since June 2020. Hedge funds and other money managers sometimes rely more on the spot price than futures for determining direction in gold.

Gold’s tumble this week was driven by the same phenomenon of the past two weeks — surging bond yields and the dollar

Yields and the greenback soared anew this week after Federal Reserve Chairman Jerome Powell said the central bank was unlikely to step up bond buying to tame fears of a sudden inflation spike from an U.S. economy increasingly becoming unshackled from the Covid-19 pandemic.

While gold itself has been touted and used as a hedge against inflation for decades, that quality has been played down for months by markets. The yellow metal has fallen from grace since August, when it hit record highs of nearly $2,090. Losses in gold have accelerated since the November breakthroughs in Covid-19 vaccines.

Traders had expected gold to see another meltdown on Friday after the Labor Department reported a growth of 379,000 jobs for February in a pandemic-suppressed market.

While that number was way above the 182,000 jobs growth forecast by economists, it also came on the back of a flat trendline for unemployment, which stayed at 6.2 percentage points.

That spared gold from another licking.

Gold Down 3rd Week in Row, After Collapse to $1,600 Territory
 

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Comments (7)
Ayaz Ahmed
Ayaz Ahmed Mar 07, 2021 9:17AM ET
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How is going to gold next week
Casador Del Oso
Casador Del Oso Mar 06, 2021 5:46PM ET
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Thank you Barani!
Kyle Truong
Kyle Truong Mar 06, 2021 4:27PM ET
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I rather wipe my ****with gold toilet paper than USD....
Rohin Bedi
Rohin Bedi Mar 06, 2021 2:50PM ET
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Can gold cross 1720 -1750 mark this week
Arunas Nasvytis
Arunas Nasvytis Mar 06, 2021 11:01AM ET
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$1519 is the most perfect fib retracement on 5 Year Chart
Lucas Low
Lucas Low Mar 06, 2021 11:01AM ET
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so everyone don't have to work.. just wait for fib retracement..
NLP NLP
NLP1 Mar 06, 2021 10:13AM ET
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“This market is on track to keep going down and I expect to see it below 1600 with potential to drop further from there.” With almost two trillion dollars on the way to dilute the already thin currency in place, how does this sentence even make sense? I’m with Falec, food and ammunition are viable trade candidates for bullion when uncertainty strikes. Lol or maybe a computer so I can access the internet and count my cryptos when all ********breaks loose. Maybe buy some virtual food with virtual coin.
Fabio falec
falec Mar 05, 2021 7:00PM ET
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Thanks as always Barani. I just want to say: "In Gold we Trust!" XD In terrible times I will be willing to exchange it only for two things: food and ammunitions! XD
Barani Krishnan
Barani Krishnan Mar 05, 2021 7:00PM ET
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Ha ha ... Falec, I like that: "In Gold We Trust!" :) Have a good one, mate!
 
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