Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Gold Nears $1,800, Then Backs off as Yields Recover

CommoditiesApr 19, 2021 03:14PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

By Barani Krishnan

Investing.com - Gold came less than $10 from returning to $1,800 an ounce on Monday, before retreating as U.S. bond yields gained ground after three woeful days of performance.

Benchmark gold futures on New York’s Comex settled down $9.60, or 0.5%, at $1,770.60 an ounce. It earlier scaled a seven-week high of $1,790.35, the closest it has come to the $1,800 territory since Feb. 26.

The spot price of gold wasn’t far from futures, trading down $4.67, or 0.3%, at $1,771.70 by 3:00 PM ET (19:00 GMT), after a peak at $1,790.06. Moves in spot gold are integral to fund managers, who sometimes rely more on it than futures for direction.

U.S. bond yields, measured by the 10-year Treasury note, hit a session high of 1.615% on Monday, after falling to a one-week low of 1.555%. The 10-year note was at a 14-month high of 1.77% on March 30.

“The outlook is becoming very bullish for gold, but in the short-term, prices could be in for a choppy period,” said Ed Moya, who heads U.S. markets research at online broker OANDA.

“While the fundamentals remain very strong for the U.S. economy and that is eating away at safe haven demand, the gold market is focused on the recovery across Europe and runaway inflation concerns across emerging markets. A stronger euro and hotter pricing pressures globally is what gold needs over the next several months to make a run towards the $1,900 level.”

Since the start of this year, gold has faced continuous headwinds as the dollar and bond yields often surged on the argument that the U.S. economic recovery from the pandemic could exceed expectations, leading to fears of spiraling inflation as the Federal Reserve kept interest rates at near zero.

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.

The Dollar Index, which pits the greenback against the euro and five other major currencies, weakened to 91.07 versus Wednesday’s settlement of 91.54.

Gold Nears $1,800, Then Backs off as Yields Recover
 

Related Articles

Gold Gains for 2nd Week, But $1850 Remains Elusive
Gold Gains for 2nd Week, But $1850 Remains Elusive By Investing.com - May 14, 2021 3

By Barani Krishnan Investing.com - Gold longs are still waiting at the $1,850 altar, but their search for suitors at that level ended in vain for a second week in a row. That,...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (3)
Meru Pet
Meru Pet Apr 19, 2021 4:47PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
meanwhile only China or mostly finished green...
Kevin McCarthy
Kevin McCarthy Apr 19, 2021 3:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hope can you talk about the economic recovery without mentioning the record high trade deficit? the economy is not healthy, it's on life support and will pass away without more FED printing. sell off in gold is transitory. inflation is not without a plan to decrease the M3. that's my opinion.
Barani Krishnan
Barani Krishnan Apr 19, 2021 3:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hello Kevin, it is implied from the background: all the printing will ultimately get baked into the inflation cake. Wall Street commentary suggesting otherwise is completely inane. Thanks for the perspective, mate.
Kevin McCarthy
Kevin McCarthy Apr 19, 2021 3:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan  love your articles, and have much respect for you. I disagree about the inflation cake, I do understand that's what the FED is trying to do, is hide inflation by making it more complicated than it really is, but inflation is only the increase in the money supply. Anything else is an attempt to get people to normalize and not properly react to the increase in M3. which is what the FED needs to not have the house of cards fall down on them. on one hand I hope it works, because I don't want to see the economy crash, but on the other hand, our economy is so weak and pathetic right now, and having the FED misleading American's isn't going to help in the long term. I hate to be Schiffian here, but he has a serious point in his ramblings. We needed to take the pain back in 2008 and let the banks fail. Now the Lie and Misdirection are too big to fail, but no one can bail those out if they go "bankrupt".
Barani Krishnan
Barani Krishnan Apr 19, 2021 3:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Kevin McCarthy  True on all counts. My read on "inflation" is exactly that -- increase in money supply. Price pressures are still a lot more subjective, no less in part to the Fed's machinations. The pandemic has also changed the rules for Too-Big-To-Fail 2.0. Suddenly, no is to blame but to the virus. Ha ha. I wonder what Bear and Lehman would say to what befell them if they're allowed to relive 2008 all over again. Thanks again for the nice exchange. I don't get this from too many readers :)
Kevin McCarthy
Kevin McCarthy Apr 19, 2021 3:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan  so let me ask you, because I'm still trying to wrap my mind around how inflation can be transitory without a plan to reduce the M3. Can the FED hold the bonds they bought until maturity and then burn the dollars recovered as a way to deflate the money supply?
I am Curry bear
Iamcurrybear Apr 19, 2021 3:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
it will retest 1680 support
wanhar M yunus
wanhar M yunus Apr 19, 2021 3:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
dont sleep bro hahha
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email