Gold prices fall more than 1% and fight to stay above $1,800 as bond yields rise


Gold futures fell sharply on Tuesday after Presidents’ Day as investors focused on gains in equities and a sharp rise in benchmark bond rates, which may rival bullion for safe-haven offers.

Indeed, bond yields hit their highest level in about a year, reflecting what some on Wall Street call a risky environment centered on hopes for progress toward a $1.9 trillion coronavirus relief package. dollars from the Biden administration, as well as declining COVID-19 cases and an increasingly successful vaccine rollout.

The fall in bullion prices accelerated somewhat after the New York Fed’s Empire State Trading Conditions Index rose 8.6 points to 12.1 in February, marking the level highest level of activity since July. Economists had expected a reading of 5.9, according to a Wall Street Journal survey.

Any reading above zero indicates improving conditions.

“This lack of energy in the [gold] the rebound is due to the permanent “risk on” scenario which dominates the stock markets. As a result, the price was unable to rebound and attack the first significant resistance at $1,845-$1,850,” wrote Carlo Alberto De Casa, Chief Analyst at ActivTrades, in a daily research note.

april gold
GCJ21,
-1.42%

GC00,
-1.42%
was trading $22.50, or 1.2%, to trade at $1,800.80 an ounce, clinging to a psychologically significant level at $1,800.

“We will only get a bearish signal with a drop below the $1,790 support zone, which is the low reached at the start of the month,” the analyst wrote.

Meanwhile, the money for delivery in March
SIH21,
-0.78%

SI00,
-0.78%
fell 24 cents, or 0.9%, to trade at $27.90 an ounce.

The moves for the metals come after gold posted a weekly gain of around 0.6% on Friday, which was its first weekly gain since the week ended Jan. 22, according to FactSet data based on the largest contract. asset. Silver recorded a weekly advance of more than 1%.

Bond yields were near the highest level since March, with the 10-Treasury rating
TMUBMUSD10Y,
1.262%
more than 1.25%. Bond prices fall as yields rise. However, higher yields for government bonds may sap appetite for gold, which does not offer a coupon.

In addition to this, measures of fear or implied volatility, as measured by the Cboe Volatility Index
VIX,
+7.66%,
were down near historical averages after remaining high since the pandemic selloff peaked in March. Lower VIX readings tend to imply a growing appetite for assets seen as risky like stocks and away for those seen as safe havens like bonds and gold.

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