Gold drops as bond yield rally delivers ‘fatal blow’

*Firm predicts further losses may come following metal’s death cross pattern as Dollar rebound may push bullion down to $1,750

Isola Moses | ConsumerConnect

Precious metal Gold steadied after posting four straight days of losses as Treasury yields held near their highest in a year on expectations that the economy is recovering from the impacts of the COVID-19 pandemic.

Progress on the Coronavirus vaccine front and the slowing pace of infections are driving optimism over global growth, boosting yields and weighing on demand for non-interest-bearing bullion, which has sunk more than 5 percent this year, Bloomberg report said.

Additional losses may be on the horizon after bullion’s 50-day moving average retreated below its 200-day counterpart, a so-called death cross pattern.

Holdings in SPDR Gold Shares, the world’s largest bullion-backed exchange-traded fund, fell to the lowest since June.

Edward Moya, senior market analyst at Oanda Corporation, “a runaway rally in global bond yields has delivered a fatal blow to gold. Yields are rising on reflation bets, and that is triggering an unwind of many safe-haven trades,” according to report.

Spot gold fell as much as 0.4% to $1,786.74 an ounce, and traded at $1,790.71 by 6:39 a.m. in London, United Kingdom.

That follows Tuesday’s 1.3% drop, and should prices end lower Wednesday that would be the worst run since March 2020.

In other metals, silver was little changed, while palladium retreated along with platinum, which hit the highest intraday level since 2014 Tuesday. The Bloomberg Dollar Spot Index rose 0.2%.

Oanda’s Moya stated: “The Dollar rebound might not be over if global bond yields continue to rally. And that could be the bearish catalyst that sends gold down to the $1,750 level.”

Kindly Share This Story