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Gold in $1,600 Territory As U.S. Bond Yields, Dollar Spike Again

CommoditiesMar 04, 2021 02:24PM ET
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© Reuters.

By Barani Krishnan

Investing.com - The resolve of the gold bull is facing an all-new test with prices of the yellow metal breaking below $1,700 an ounce for a second day in a row after remarks on the U.S. economy by Federal Reserve Chairman Jay Powell sent bond yields and the dollar soaring.

Gold futures on New York’s Comex snapped below $1,700 on Wednesday, the first time since April last year, and were back below those levels after Thursday’s official session on the exchange. The spot price of gold, which reflects real-time trades in bullion, hit $1,600 territory the first time since June on Thursday.

Gold for April delivery on New York’s Comex settled down $15.11, or 0.9%, at $1,700.70 an ounce. By 2:10 PM ET (19:10 GMT), some 40 minutes after the official session, it traded at 1,695.10, after hitting a low of $1,687.75.

Spot gold was down $13.25, or 0.8%, to $1,697.89, after a bottom $1,690.72. Hedge funds and other money managers sometimes rely more on the spot price than futures for determining direction in gold.

The yield on the benchmark U.S. 10-year bond rose to nearly 1.55% after Powell admitted at an event hosted by The Wall Street Journal that a recovering economy could "create some upward pressure on prices,” before adding that any rise in inflation would be "transitory".

Powell's comments pulled down a stock market that in recent days had seen investors questioning the valuations of high-flying tech stocks such Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN).

Gold, already in meltdown mode for some time, got swept into the stocks rout despite its so-called inflation hedge and the imminent passage expected for President Joe Biden’s $1.9 trillion Covid-19 relief bill.

The dollar, the alternative trade to gold, soared with the Dollar Index, which pits the greenback against six major currencies, hitting a four-month high at 91.68.

Since Feb. 22, the benchmark gold futures has lost $115, or nearly 6.5%. In Tuesday’s trade, its only positive session in the past seven, it rose just around $10, or 0.6%. For the year, gold is down almost 10%.

Traders now await the U.S. Labor Department’s release of the February jobs report. The market’s consensus is for a growth of 180,000 jobs last month, above January’s 49,000 expansion. Much higher growth could again weigh on the yellow metal.

“Gold bulls are getting dizzy as they look over a cliff of price action that could see another $100 of weakness,” said Ed Moya, analyst at New York’s OANDA. “If the bond market continues to ignore the Fed, gold could be in for a few rough weeks.”

Gold in $1,600 Territory As U.S. Bond Yields, Dollar Spike Again
 

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Comments (31)
Flynn Flynn
FlynnFlynn Mar 05, 2021 1:29AM ET
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For retail investors and funds, gold is a safe haven. But with the monetary policy of each country, the domestic currency is guaranteed by gold, limiting the devaluation of the domestic currency. Gold will definitely go up in price.
Brian Forehand
Brian Forehand Mar 04, 2021 8:17PM ET
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silver is a better bet
Flynn Flynn
FlynnFlynn Mar 04, 2021 7:09PM ET
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No way. Bond interest rates continued to rise and USD continued to increase. With America's stimulus packages, it's not about pumping investment money into the economy, it's about personal spending. Not just America. It just makes sure the people don't starve to death, the manufacturer guarantees the minimum order.
Mohin Uddin
Mohin Uddin Mar 04, 2021 7:02PM ET
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gold next....1600
Stanphen George
Stanphen George Mar 04, 2021 6:09PM ET
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Safe investment is gold these days
Bulent Ok
Bulent Ok Mar 04, 2021 6:01PM ET
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Watch how everything takes a different turning comes Monday... Tomorrows job numbers this and that means nothing.. Reality is in front of us... This time unfortunately all governments are going down under.... End of the tunnel I see the valley of Safe heaven called GOLD... Bitcoin crash to between 16 and 24k in the making... Get ready.
Jacob Steinschlag
Jacob Steinschlag Mar 04, 2021 6:01PM ET
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lol what did you take mate? agree gold becoming shiny safe heaven again but the rest...man you're high af 🤣
The Chad Bull
The Chad Bull Mar 04, 2021 5:44PM ET
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Gold is going to $5,000 by end of summer mark my words
Mohamed El Saiid
Mohamed El Saiid Mar 04, 2021 5:40PM ET
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1670-1650$ are being reached in next trading sessions
Yiannis Tsoutsoukis
Yiannis Tsoutsoukis Mar 04, 2021 5:36PM ET
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Hello Barani, what's your speculation for gold price in the short and long term?
Barani Krishnan
Barani Krishnan Mar 04, 2021 5:36PM ET
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Yiannis, I'll be plotting some charts tonight to figure out. Not sure yet if the bottom is in or near. If there's more pain, then support could emerge before the June 2020 low of 1,670 for spot. Otherwise next major support rests at $1,566, which is the April 2020 low. That would wipe all out of the Covid gains. Maybe that's what the JPMs and Nova Scotias of the world are doing for their central banker friends who want to buy it insane cheap, before it starts again on a new track higher.
Mehmet Aksarayli
Mehmet Aksarayli Mar 04, 2021 5:36PM ET
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Barani Krishnan I remember as sunil was saying if gold doesnt hold $1709 might see $1650 that might be the case here but saying that this is crazy times we never know what we get.
Omar Rahim
Omar Rahim Mar 04, 2021 5:33PM ET
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I believe this is the bottom gold 1700 area is where it could sit for a while. Eventually should gain strength as markets start to adjust
Fatehul Saif
Fatehul Saif Mar 04, 2021 5:33PM ET
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SMA
Short Gold
Short Gold Mar 04, 2021 5:13PM ET
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161489555862476.jpg
Gold will fall harder than it did when Operation Twist was unwound causing it's price to plummet from $1800 to $1100 in 6 months, except you have Bitcoin which is being hyped as the digital gold now to tackle inflows from investors concerned about inflation. The lockdowns are ending and the economy is going to be on fire; Powell today again reiterated what he said last week to Congress- he does not care that yields are rising and YCC is 100% off the table, he's not even thinking about thinking about YCC. Death crosses have formed on all SMA. On top of that, speculative longs are 387K contracts and shorts 91K short according to CFTC COT data. As the price keeps dropping they will get begin liquidating causing a massive exodus, and new hedge fund money will come in to short. Big funds are massively underwater on their speculative longs, with those that bought at the top holding losses of $38,000 a contract so far.. Gold is dead. Long live gold.
Tumelo Mash
Tumelo Mash Mar 04, 2021 4:40PM ET
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I've been selling from 1797 having serious concerns about all that money that the Fed is printing and more on the way. A good economy in the long term equals risk off which is more pressure on Gold... A perfect setup for a sell. Gold is still gonna fall back to 1500 forget about buying it you just buying retracements and please keep donating if you think gold will ever see 1800 again I beg you
Cogito Ergo sum
Cogito Ergo sum Mar 04, 2021 4:38PM ET
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Goldman, stop digging and mining gold so that the price turns upward. GOLDMAN ***!
Casador Del Oso
Casador Del Oso Mar 04, 2021 4:38PM ET
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I was thinking about buying BAR when gold hits low 1600s.
Dorin Zogorean
zogo Mar 04, 2021 4:24PM ET
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It's a jocke. May be u can get another job
emmanuel umana
emmanuel umana Mar 04, 2021 4:24PM ET
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watch gold come wey down to 1655 level or more
NLP NLP
NLP1 Mar 04, 2021 4:02PM ET
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Thanks for another nice article. Looks like some of the major market manipulators have initiated positions in several strong miners and streamers. This may indicate a consolidation approaching. As well, the miners didn’t suffer as much as expected with today’s bullion demise suggesting it may be more transient than not. Interesting times.
보람 한
보람 한 Mar 04, 2021 3:38PM ET
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I want buy a gold bar.
Jo Shuma
Jo Shuma Mar 04, 2021 3:12PM ET
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So who was saying gold will hit $2000?
Barani Krishnan
Barani Krishnan Mar 04, 2021 3:12PM ET
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Just to remind you, Shuma: This was your comment from September 8: Spot gold hasn't closed below $1912 since Aug. It closed at $1928.44 yesterday and it was a holiday. DXY just reached last resistance level at 93.46. Looks like consolidation.
Brian Peaden Jr
Brian Peaden Jr Mar 04, 2021 3:12PM ET
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Too soon, stay long.
Francesco Lucchesi
Francesco Lucchesi Mar 04, 2021 3:12PM ET
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it will hit 3000. it's certainly not bitcoin so will take a little longer
Erminio Deangelis
Erminio Deangelis Mar 04, 2021 2:58PM ET
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bitcoin the new gold standard
Brian Peaden Jr
Brian Peaden Jr Mar 04, 2021 2:58PM ET
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blockchain maybe, PoS might be more efficient?
victor pedroza
victor pedroza Mar 04, 2021 2:57PM ET
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good days for buy on that Yellow stuff.
Brian Peaden Jr
Brian Peaden Jr Mar 04, 2021 2:57PM ET
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Or PAXG if you want blockchain backed in Gold
Kahindi francis
Kahindi francis Mar 04, 2021 2:57PM ET
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Gold will hit $1600 soon.. probably next week!!! With these yielding bonds & the dollar’s future looks bright!!
Jacob Steinschlag
Jacob Steinschlag Mar 04, 2021 2:57PM ET
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bs. gold is manipulated as ******** with the current money supply inflation it should be trading by the 2500's right now. It will surge like nothing else soon. Mark my words.
Jermaine .A
Jermaine .A Mar 04, 2021 2:55PM ET
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Powell's playing chicken with the markets. When rates get too high he'll cry uncle and increase QE.The U.S can't handle high rates on any part of the yield curve. Not too long then it'll be time to buy this dip with both hands, especially the miners and royalty companies.
Abdelraziq Abuaisha
Abdelraziq Abuaisha Mar 04, 2021 2:54PM ET
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Let’s buy more physical gold and silver, and dump more Dollars. I live in the Gaza Strip dear writer, many are complaining that there are no more gold ounces left in markets, because of high demand. I’m pretty sure same happens all around the world. Your system can do whatever it wants, as I can see reality speaks more loud :)
Mike Molov
Mike Molov Mar 04, 2021 2:51PM ET
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Almost Free gold with unlimited printed dollars,  one time offer.  Get yours now!
Carter Spicer
Carter Spicer Mar 04, 2021 2:50PM ET
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Gold man. Cant get its act together
 
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