Gold price drops below $ 1,800, its lowest level in 2 months
Spot gold fell below $ 1,800 / oz for the first time since late November, down 2.5% to $ 1,787.95 / oz at 11:30 am EST. US gold futures also fell 2.5% to $ 1,788.60 an ounce in New York.
Meanwhile, silver, the sister metal of gold, also fell – falling 2.9% to $ 26.13 / oz – with the market facing a correction following the fueled retail buying frenzy. by Reddit which propelled prices to an 8-year high earlier this week.
“This flight to money by some retail investors has been an excessive move upward, which is now corrected to normal levels supported by fundamentals,” Quantitative Commodity Research analyst Peter Fertig told Reuters.
“Gold is also under pressure on the technical side,” said Daniel Briesemann, analyst at Commerzbank. “It fell below the 200-day moving average, triggering a technical follow-up sell-off.”
A stronger dollar, yields
Making bullion more expensive for those holding other currencies, the dollar hit a two-month high, while 10-year Treasury yields hit a three-week high.
Gold is seen as a hedge against inflation through large stimulus measures, but higher yields challenge that status as they increase the opportunity cost of holding unproductive bullion.
Investors are also focusing on the $ 1.9 trillion U.S. coronavirus aid plan adopted by the U.S. House without Republicans backing.
“The biggest risk for gold is a stronger recovery with the vaccine rollout as we see US bond yields rebound,” said Lachlan Shaw, head of commodities research at National Australia Bank.
“However, prices could remain strong if the rollout faces uncertainty due to emerging virus variants.”
