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Gold Plunges Beneath $1,700 as U.S. Yields, Dollar Spike

CommoditiesMar 30, 2021 03:53PM ET
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By Barani Krishnan

Investing.com - Gold prices fell hard Tuesday, breaking beneath the $1,700 support it has held since mid-March, as rival dollar reached a key bullish level on rising U.S. bond yields.

Benchmark gold futures on New York’s Comex settled down $28.60, or 1.7%, at $1,686 an ounce, after falling to as low as $1,678.80. It was the first time Comex gold had revisited the $1,600 levels since March 12. It was also the biggest one-day drop since Feb. 26.

The spot price of gold traded not far from futures, down $28.06, or 1.6%, at $1,684.30 by 3:50 PM ET (19:50 GMT), after an intraday low of $1,678.90. Fund managers sometimes rely on the spot price more than futures for direction.

The Dollar Index, which pits the greenback against six major currencies, shattered its key 93 ceiling, piling fresh pressure on gold. The dollar catapulted after yields on the U.S. 10-year Treasury note reached 1.77% — a high not seen since January 2020.

Both bond yields and the dollar are surging on U.S. economic recovery hopes despite a tick up in Covid-19 infections from new variants of the virus.

A combination of an accelerating vaccine rollout program and the prospect of an additional $3 trillion to $4 trillion in infrastructure spending from the Biden administration is fueling optimism that the U.S. economy will bounce back much faster than initially expected.

“Gold is unloved amid higher yields,” Sophie Griffiths, a U.K.-based market analyst for OANDA, said in a note.

“We have seen signs of the reflation trade questioning the Federal Reserve’s ability to keep interest rates at current ultra-low levels. The fresh leg high in yields is hitting demand for non-yielding gold hard.”

Technical charts, however, indicated the yellow metal could recover if it hit under $1,665.

“Weekly chart price action reflects credible support on 100-week Simple Moving Average at $1,663,” said Sunil Kumar of SK Dixit Charting.

“A steady reversal will still need prices sustaining above $1,707-$1,720. Upside can be seen from $1,720 to $1,745 and $1,785.”

Gold Plunges Beneath $1,700 as U.S. Yields, Dollar Spike
 

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Comments (12)
Chart Harmonics
Chart Harmonics Mar 30, 2021 8:48PM ET
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100 week SMA? Who the heck trades based on that??
Barani Krishnan
Barani Krishnan Mar 30, 2021 8:48PM ET
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If you've nothing of value to say, kindly stay away.
Humza Mehtab
Humza Mehtab Mar 30, 2021 8:48PM ET
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So whats ur trading strategy then
John Healy
John Healy Mar 30, 2021 8:28PM ET
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I see the gold price pullback as a gift. I’m buying bullion all the way down.
Meru Pet
Meru Pet Mar 30, 2021 5:44PM ET
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check xau/eur.
peter neal
peter neal Mar 30, 2021 5:15PM ET
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Interest on U S Debt will be One Trillion Anually shortly. President Harris will destroy the United States with the Socialist Agenda. They have opened the Border to allow millions of new Democrat voters in and to keep them in office. They won't stop. Dollar will be 🗑️. Buying and holding Gold.
Meru Pet
Meru Pet Mar 30, 2021 5:15PM ET
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what you suggest is more an appeal to buy SWBI shares...
NLP NLP
NLP1 Mar 30, 2021 3:35PM ET
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Mr. Krishnan, I always look forward to your articles and enjoy your insight. Here’s my 2 cents (it’s actually worth less than that based on current trends): Golds five-year trajectory has a bullish inclination. It demonstrates a store of value. The 10-year yields 20-year chart shows a clear decline.  If this were inclining, the government would have trouble servicing it’s debt. The dollars 20-year chart resembles a sine wave in a descending stage.  Possible real inflation on the rise. All point to bullion eventually becoming higher in value. More stimulus and infrastructure money just keep pushing the above charts in the directions they are already headed. Now add the fact that banks will be "forced" to use allocated gold accounts to help generate their revenues. With possible infrastructure stimulus in the next 2 months and Basel III by the end of June, it would make sense for bullion to be worth more by the middle of the year.   How much more is a pure guessing game.
Barani Krishnan
Barani Krishnan Mar 30, 2021 3:35PM ET
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Greetings, NLP1; hope all's well and really honored to have readers like you. Your 2 cents is more like 2K ... ha ha. Indeed, your insight makes so much sense, if only one has to patience to ride out the madness of the "now" in gold in wait of what's to come. In the school of economics I subscribed to in the 80s -- yes, the old school -- inflation was just inflation and gold was gold: meant as a hedge. Now, of course, Wall Street banks have redefined all the rules, enough to make Keynes roll over in his grave many times. Let's see wait for the summer and Basel bring. Bests to you and thanks again for the insight.
hans gaaikema
hans gaaikema Mar 30, 2021 2:07PM ET
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Peter Schiff is one of the few people making sense to me. Fundamentally all assets are inflated due tot helicopter money. One day, sooner or later the party stops. Good luck with holding fiat money.
Mohammed Yasir
Mohammed Yasir Mar 30, 2021 1:14PM ET
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Nice poet
Aoko Thomas
Aoko Thomas Mar 30, 2021 1:14PM ET
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Lol
Imrankhan Imrankhan
Imrankhan Imrankhan Mar 30, 2021 12:43PM ET
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GOP 100
Asim Abbasi
Asim Abbasi Mar 30, 2021 12:33PM ET
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Gop 1200$ weeks
Maks Mars
Maks Mars Mar 30, 2021 12:33PM ET
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Tons of gaps are calling below never been so easy to sell most overpriced thing of the planet lol
Pablo Blanc
Pablo Blanc Mar 30, 2021 12:23PM ET
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Its all a game
George Jetson
George Jetson Mar 30, 2021 12:04PM ET
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damn...everyones making money. I feel bad for the peter schiff boys. 🤣
Maks Mars
Maks Mars Mar 30, 2021 10:20AM ET
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Gap 1300 $ filled in few weeks lol
Show previous replies (1)
Barani Krishnan
Barani Krishnan Mar 30, 2021 10:20AM ET
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SunilKumar Dixit  Opera, unfortunately, is a running theme with many of the comments here. Like you, I wish for better exchange with my readers. Some really provide me with insights that I sometimes miss; those are the ones I really cherish.
SunilKumar Dixit
SunilKumarDixit Mar 30, 2021 10:20AM ET
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Barani sire I couldn't find anything that would justify 1300 given where gold stands despite the free fall. We put forth variables with appropriate relativity. I still believe 100 week SMA 1663 will act as a meaningful support.
Barani Krishnan
Barani Krishnan Mar 30, 2021 10:20AM ET
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SunilKumar Dixit  Spot on. Any call made should be backed with a lucid explanation and path -- as you always do.
Maks Mars
Maks Mars Mar 30, 2021 10:20AM ET
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Barani Krishnan sorry for small traders trapped but big ones just started selloff better run away to limit damages
Barani Krishnan
Barani Krishnan Mar 30, 2021 10:20AM ET
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Maks Mars  The whales swallowing the little feeders has been a recurring theme in gold. What Sunil is basically telling you to do is to use some logic; not try and introduce your own drama of an unsubstantiated downside of another 20%.
 
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