Once again, gold trades below $1800 per ounce

Gold prices fell off sharply today in active trading. Gold futures basis the most active April 2021 Comex contract fell by $29.50, and its last print was $1793.70. That was until it opened in Australia, and as of 6:05 PM, EST, which represents Wednesday’s open. Gold is currently fixed at $1791.30, showing a net decline of $7.70 on the day or a total of- 0.44%.

This is the second time in the last week that traders could move the needle pressing pricing lower below $1800.

As reported by MarketWatch, Chintan Karnariu, chief market analyst at insignia consultants, told MarketWatch, “adding that there are some expectations that the ten-year bond yield will continue to rise for the rest of the month. This, of course, has a real potential to continue to keep gold prices under pressure.

Another bearish indicator is that Reuters reported that gold, as well as silver funds, saw their most significant weekly outflows over the last three months. According to the article, traders rebalance their portfolios moving money from the safe-haven asset of precious metals into equities that have been on a rampage and higher-yielding bonds.

Reuters also cited that” The outflows from precious metal funds also came as the U.S. Treasury yields hit an over 6-month high, on hopes large stimulus measures from the United States would accelerate the country’s economic growth.”

Part of the price drop was due to a rise in bond yields, with a small component due to e dollar strength. Currently, the U.S. dollar index is at 90.55 with negligible gains of about 1/10 of a percent. However, New York’s Fed’s Empire State business condition index revealed a rise of 8.6% to 12.1% in February. This marks the highest value since July. More importantly, it came in well above economists’ expectations, looking for a rise of 5.9%.

One shining element in the precious metals markets continues to be platinum. Platinum prices have moved to a 6 ½ year high on Tuesday. Economists believe that this was initiated by the expectations that the global economy will rebound, which would fuel the need for more platinum as it is a highly industrial metal specifically used in catalytic converters. CNBC reported that although bullion is considered a hedge against inflation expected from a massive economic stimulus, it is that stimulus that is pushed 10-year Treasury yields higher.

The fact of the matter is whether market sentiment in regards to bidding U.S. equities higher is occurring a little too fast or too soon. It is nonetheless what the vast majority of markets are doing. As long as global stocks continue to run in this lively manner, we could see continued pressure on the safe-haven asset; gold.

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