Gold holds above $1800 as silver trades to $28.00

Gold futures traded to an intraday low of $1782.20 before recovering, closing just above $1800. As of 4:44 PM EST, the most active April 2021 contract of gold futures is currently fixed at $1802.90, which is a net decline of  $3.00  on the day. In terms of a percentage drawdown today, it was truly fractional, with gold giving up 0.015%.

However, silver was able to continue to gain value closing at the key psychological level of $28 per ounce, this basis the most active March 2021 Comex contract. Although dollar weakness was a contributor to the gains realized in silver, platinum, and palladium, the vast majority of gains realized today in those precious metals were primarily due to market participants bidding those precious metals higher.

The dollar also tempered the drop in gold prices today. According to the KGX (Kitco Gold Index), spot gold is currently trading at $1804, which is a net decline of $2.50. On closer inspection, market participants bid gold pricing lower to the tune of $4.50, but the two dollar gain due to dollar weakness was able to temper the drop. Spot silver had a net gain of $0.30 today and is currently fixed at $27.94. According to Kitco, the $0.30 gain today was a combination of buying which resulted in a gain of  $0.27, with the remaining $0.03 directly attributable to dollar weakness.

Platinum staged a strong recovery closing up $35.50 today, with the most active April 2021 contract currently fixed at $1274.50. Most impressive was its recovery from yesterday’s low, which came in at $1218. That represents a $56.50 price swing between yesterday’s intraday low and the current closing value.

One plausible explanation for the uncoupling of gold pricing when compared to the three white precious metals; silver, platinum, and palladium, is that these three precious metals have a high demand in manufacturing and therefore will reflect the forward forecasting based on improvements in the economy which would lead to increased demand for these three metals. While gold does have industrial usage, it is far less than the other three precious metals.

While the pandemic still rages, there is solid data that indicates that the infection rate and deaths caused by  Covid –19 has been dropping. It is that information that has fueled bullish market sentiment in U.S. equities. In a  Marketwatch article today, Matt Orton, director and portfolio specialist with Carillon Tower Advisors, put it very eloquently by saying that the recent rise in U.S. Treasury bond yields are “highlighting that markets appear to be more willing to accept the economic recovery narrative” and putting pressure on prices for gold.”

He also mentioned that Chairman Jerome Powell has “specifically commented that the recent rise in bond yields is a healthy sign of economic expectations and downplayed inflationary fears from U.S. fiscal policy. This optimism on the recovery, coupled with expectations for relatively benign inflation, presents a major headwind to gold.”

The current data on the pandemic suggests that there is not only light at the end of the tunnel, but the end of the tunnel is becoming visible. Many medical experts, including Dr. Anthony Fauci, the top immunologist who has served as the director of the National Institute of Allergy and Infectious Diseases (NIAID) since 1984 and is the chief medical advisor to President Joe Biden, suggested that we could see an effective end to the pandemic by the end of 2021.

Wishing you, as always, good trading and good health,