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Gold Heads for Second Monthly Loss as Rising Yields Curb Demand

CommoditiesFeb 24, 2021 08:54PM ET
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© Reuters. Gold Heads for Second Monthly Loss as Rising Yields Curb Demand

(Bloomberg) -- Gold headed for a second straight monthly decline as surging bond yields damped demand for the metal which doesn’t bear interest, while investors also weighed comments from the Federal Reserve chair on growth and inflation with encouraging vaccine news.

In his second day of testimony to Congress, Jerome Powell emphasized his view that the economy has a long way to go in the recovery and signs of prices rising won’t necessarily lead to persistently high inflation. On the vaccine front, Pfizer Inc. (NYSE:PFE) and BioNTech SE’s Covid-19 shot was overwhelmingly effective against the coronavirus in a study that followed nearly 1.2 million people in Israel, results that public-health experts said show that immunizations could end the pandemic.

Bullion is down 5% in 2021 after posting its best annual gain in a decade as benchmark 10-year Treasury yields climb to the highest in a year and holdings in exchange-traded funds backed by the metal decline. Goldman Sachs Group Inc (NYSE:GS). cut its gold forecast, pointing to a rotation into riskier assets as a reason for the metal’s under-performance.

Spot gold slipped 0.1% to $1,803.81 an ounce by 7:34 a.m. in Singapore, and is 2.4% lower in February, following a 2.7% drop a month earlier. Silver fell, while platinum and palladium were little changed. The Bloomberg Dollar Spot Index was steady after retreating for five days.

©2021 Bloomberg L.P.

Gold Heads for Second Monthly Loss as Rising Yields Curb Demand
 

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Comments (1)
Stuart McWhirter
Stuart McWhirter Feb 24, 2021 9:56PM ET
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Gold @ 2500 by end of year. Mark it.
Kelly Mayer
Kelly Mayer Feb 24, 2021 9:56PM ET
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Hmmm... Perhaps according to the old paradigm... It seems that they are creating a new paradigm, flood the economy with money so it recovers faster and debt gets paid faster (vs not issueing that much debt in 2008 and having had a much slower recovery and payment of debt). If this works, then gold will raise a bit, then go back to lower levels all within a short period of time. Maybe not go up at all, considering it may be a recovery by sectors and not a global one, meaning not all sectors of the economy are in a crisis. I don't know, just thinking out loud.
Kelly Mayer
Kelly Mayer Feb 24, 2021 9:56PM ET
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Silver is undervaluated however... And copper seems to be picking up aswell...
Lawrenti Berija
Lawrenti Berija Feb 24, 2021 9:56PM ET
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2.5 well . from your lips to God's ears.
 
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