Gold dips on rising U.S. yields, platinum tops fresh 6-year peak
· Gold eased on Monday after U.S. Treasury yields jumped to their highest in nearly 11 months in the previous session, with platinum scaling a six-year peak on expectations of a supply shortfall.
· Spot gold fell 0.1% to $1,821.84 per ounce by 0041 GMT. U.S. gold futures slipped 0.1% to $1,822.30.
· Platinum rose 1.1% to $1,265.89, after hitting its highest since January 2015 at $1,269.30. Platinum, used by the auto industry to filter emissions from engine exhausts, may see a third consecutive annual deficit in 2021, according to specialist materials firm Johnson Matthey.
· Benchmark U.S. Treasury yields rose to their highest levels since March on Friday, while inflation expectations edged up to a six-year high.
· Higher inflation boosts gold but also lifts Treasury yields, which in turn increases the opportunity cost of holding bullion.
· U.S. President Joe Biden pushed for the first major legislative achievement of his term on Friday, turning to a bipartisan group of local officials for help on his $1.9 trillion coronavirus relief plan.
· U.S. Treasury Secretary Janet Yellen on Friday urged G7 finance leaders to “go big” with additional fiscal stimulus to recover from the COVID-19 pandemic.
· Physical gold demand eased last week in India as volatility in domestic prices put off buyers, while interest for silver remained strong in Singapore and Japan.
· Hedge funds and money managers raised their bullish positions in COMEX gold and cut them in silver contracts in the week to Feb. 9, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
· Gold Price Analysis: XAU/USD eyes $1800 support amid symmetrical triangle breakdown
Gold (XAU/USD) is accelerating the turnaround to the downside, despite the weakness in the US dollar, as the coronavirus vaccines-driven optimism overwhelms the buyers.
The XAU bulls were banking on the US stimulus, although with a little update on the fiscal spending front, they are yielding into the bearish pressure.
The holiday-thinned trading is also seen exaggerating the down moves so far this Monday. China is closed due to the Lunar New Year break while the Americans celebrate President’s Day this Monday.
The pain in gold is also exacerbated by the technical selling, with the symmetrical triangle breakdown confirmed on the hourly sticks.
The pattern validation now targets a test of the key $1800 support, below which the February 5 low of $1792 could be tested.
The relative strength index (RSI) inches lower below the midline, currently at 43.94, backing the downside moves. Note that the chart displays an impending death cross, with the 50-hourly moving average (HMA) on the verge of piercing the 200-HMA from above.
Alternatively, any recovery attempts could meet fresh supply around $1822, which is the confluence of the pattern support now resistance and horizontal 21-HMA.
Further up, strong resistance around $1827 could limit the advances. That level is the meeting point of the pattern resistance, 50 and 200-HMAs.
· Gold Futures: Look neutral/bearish near-term
Open interest in gold futures markets shrunk for the second session in a row on Friday, this time by more than 3K contracts according to flash data from CME Group. Volume, instead, extended the choppy activity and rose by 25.3K contracts.
Gold faces the next support at $1,800/oz
Gold prices dropped to the $1,810 area and rebounded, although closed the session with small losses on Friday. The move was on the back of shrinking open interest, leaving the idea of further decline well on the table in the very near-term. Against this, the next support of relevance emerges at the key $1,800 mark per ounce.
The price of gold has weakened from its highs in January, but according to technical analysis, as long the price is above $1800, this precious metal is in the “buy” zone. The important support levels are $1800 and $1700; $1850, $1900, and $2000 represent the resistance levels.
If the price falls below $1800, it would be a firm “sell” signal, and we have the open way to $1750. On the other side, if the price jumps above $1850, it would be a signal to trade gold, and we have the open way to $1900.
Summary
Gold price weakened has weakened from $1959 below $1800 since the beginning of January, and the current price stands around $1823. A sharp drop in new COVID-19 cases keeps the financial market in a positive mood, though the new coronavirus variants could make a problem again. Risk aversion will likely prevail in the upcoming weeks, and if the price jumps above $1850, it would be a signal to trade gold, and we have the open way to $1900.
· Silver gained 0.4% to $27.46 an ounce and palladium climbed 0.1% to $2,389.67.
Reference: CNBC, FXStreet
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