(Bloomberg)-Gold fell below US$1,900 per ounce, its biggest two-day decline in seven years, as investors withdrew from one of the hottest deals in 2020.
After setting a record high of US$2,000 per ounce last week, with the rise in US bond yields, gold’s gains have stalled, eroding the appeal of safe havens. The rapid decline was due to the moderate outflow of gold-backed exchange-traded funds (ETF) and the 15 days when the relative strength index was in the overbought zone.
Gold has been one of the best-performing commodities this year, and the safe haven is favored because the coronavirus pandemic has hit the global economy, prompting central banks and governments to adopt large-scale stimulus measures. Its reversal poses a challenge to metal supporters, who have pointed out that prices will continue to rise.
HDFC Securities Co., Ltd. senior analyst Tapan Patel (Tapan Patel) said: “We expect the US aid package may lead to further increases in yields, which may depress prices in the short term.” US health care costs rise and The expansion of the balance sheet will continue to support gold prices in the long run. “This correction may be short-lived. In the context of slowing economic growth, gold prices are supported by broad fundamentals.
Due to improved risk appetite and a large number of upcoming bonds, the benchmark Treasury bond yield has climbed by more than 10 basis points so far this month. Standard Chartered Plc said the recent rebound reflects investors’ hope that the Covid-19 vaccine released in Russia will contain the coronavirus.
Gavin Wendt, a senior resource analyst at MineLife Pty, said: “Once the price of gold rises to $2,000 per ounce, in the eyes of many investors, this may be an opportunity to profit from the table. Regarding the Russian vaccine The news “suggested that some investors profited from gold positions and jumped back to stocks. This is a high-risk game, but if you are sitting on profit, it is a good strategy,” he said.
At 12:16 pm Singapore time, spot gold fell 2.1% to US$1,872.61 per ounce, trading at US$1,882.11. Silver also fell sharply, the futures price fell more than 9% at one time, and the transaction price was less than 24 US dollars per ounce.
Gold still has supporters. Jeffrey Gundlach of DoubleLine Capital LP said that despite the setbacks, he still expects gold to continue to rise. Among the banks that are forecasting a sharp rise in recent weeks, Bank of America Corp. predicts that the price will rise to $3,000.
Avtar Sandu, senior commodities manager at Singapore-based brokerage firm Phillip Futures, said in a report: “Expectations regarding the recovery of the V shape from the coronavirus lock-in are still out of reach.” The long-term fundamental drivers of gold remain positive in the outlook. of. However, in the short term, gold prices seem to be responding to headline news events, and the technical outlook is expected to consolidate in the future. “
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