(Bloomberg) – Gold’s title rally was engulfed by volatility as investors reassessed the value of one of 2020’s hottest pandemic-induced deals. Monday, paradise sank below $ 1,900 an ounce on Tuesday just to overturn those losses as ever.
After setting a record of over $ 2,000 an ounce last week, gold’s momentum suddenly stopped when US bond yields rose, eroding the appeal of paradise. The initial drop followed modest outflow from gold-backed exchange-traded funds and 15 days of overbought for the relative strength index.
Gold is one of the best performing commodities this year, with paradise in favor as the coronavirus outbreak hits the global economy, prompting central banks and governments to take action. great stimulant method. Its stumble represents a challenge for metal proponents who have marked a lengthy bull run.
Benchmark Treasury yields have risen more than 10 basis points so far this month, amid improved risk appetite and impending debt issuance. The recent rebound reflects investor hopes that the coronavirus will be contained after Russia announced the Covid-19 vaccine, according to Standard Chartered Plc.
Tapan Patel, senior analyst at HDFC Securities Ltd., said: “We can expect yields to rise further due to expectations on the US aid package, which could put pressure on prices in Short-term”. will continue to support gold prices in the long term ”.
After falling 5.7% on Monday, the biggest one-day loss in seven years, spot gold fell 2.6% to $ 1,863.15 an ounce, then traded higher at $ 1,916.51. at 8:11 am in London. Silver also saw significant volatility, with futures losing more than 9%, then cutting off much of that decline.
According to Gavin Wendt, senior resource analyst at MineLife Pty, when gold “hits $ 2,000 an ounce, in the minds of many investors, it could be an opportunity to make a profit.” profit from their gold positions and return to stocks. “
Newcrest Mining Ltd. Australia’s biggest gold producer, which reported earnings this weekend – fell as much as 4.5% in Sydney before erasing some of those declines. In Hong Kong, the Hong Kong-listed shares of Zijin Mining Group Co. has decreased by more than 12%, then equivalent to their decrease.
Gold is still highly supported by many people. Jeffrey Gundlach of DoubleLine Capital LP says he expects gold to continue to trade higher despite the failure. Among the banks that have forecast a significant increase in recent weeks, Bank of America Corp. has predicted that the price will reach 3,000 USD.
“Expectations for a V-shaped recovery after coronavirus lockouts are still far from,” said Avtar Sandu, senior commodity manager at Singapore-based Phillip Futures brokerage. “The long-term fundamental drivers of gold remain positive in the outlook. In the short term, however, the gold price appears to be reacting to heady news events and the technical picture shows some consolidation ahead.
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