Gold futures made modest moves in both directions on Tuesday after back-to-back declines, as investors assess demand for the yellow metal waned, amid worries about the spread of the delta variant of the coronavirus which roiled financial markets Monday.

Gold prices “remained heavy, pressured by the dollar,” said Victor Argonov, senior analyst and economist at EXANTE, in a market update.

“In recent days, we have seen bond yields come under renewed pressure as investors have rushed back to the perceived safety of government bonds, driving their prices higher,” he said, citing concerns over the spread of the delta variant of COVID as the likely reason for the rise in bonds.  

When bond yields fall, “this reduces the opportunity cost of holding gold and silver as the metals pay no interest or dividend, and cost money to store,” Argonov said, noting that should be supportive for precious metals prices. “But it hasn’t played out this way, thanks to the dollar’s strength.”

In Tuesday dealings, the ICE U.S. Dollar Index
DXY,
+0.16%

was up nearly 0.3%.

“But if the weakness for bond yields persists, the stage is set for gold to stage a back in the not-too-distant future,” said Argonov.

August gold
GC00,
+0.09%

GCQ21,
+0.09%

fell by 30 cents, or 0.02%, to $1,808.90 an ounce on Comex after trading as high as $1,825.90. July silver
SIU21,
-0.69%

was down 25 cents, or 1%, at $24.90 an ounce.

Gold edged lower Tuesday despite a flight to safety that accelerated a fall in U.S. Treasury yields, sending the 10-year note
TMUBMUSD10Y,
1.214%

to its lowest since mid-February. The 10-year yield declined further on Tuesday after a round of mixed data on U.S. housing.

The technical configuration for gold “isn’t reassuring to investors as the market recently broke out of its short-term bullish trend line following a 50% bullish retracement of the last bearish impulsion from the $1,900 zone,” said Pierre Veyre, technical analyst at ActivTrades, in a note.

He said the short-term outlook for gold remains bearish as long as the price doesn’t top $1,820 an ounce, with $1,794 and $1,782 the next support zones.

Other metals traded on Comex were mixed, with September copper
HGU21,
+1.43%

added 1.4% to $4.26 a pound, following a 2.8% fall Monday.

October platinum
PLV21,
-1.08%

shed 0.9% to $1,061.80 an ounce, while September palladium added 0.6% to $2,609 an ounce.

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