Gold is set to its lowest level since June as the ‘death cross’ chart pattern indicates a downtrend

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Gold futures posted a fourth straight loss on Wednesday, with prices posting their lowest end since June, when a death crossover chart pattern formed, indicating a possible long-term downtrend in metal prices. Wednesday’s most active gold futures contract marks its first death cross since June 2018, according to Dow Jones Market Data, with the 50-day moving average at $ 1,856.46 and the 200-day moving average at $ 1,857.67.

A death crossover occurs when the 50-day moving average crosses below the 200-DMA, which is widely viewed as a dividing line between long-term bullish and bearish trends. The death cross “is not an ideal development for gold,” especially since that hasn’t happened in more than two years, Craig Erlam, Oanda’s senior market analyst, said in a market update. Higher yields on US Treasuries are “making investors a bit nervous and are generally positive for the dollar,” he said. A pullback above 91 on the ICE US Dollar DXY Index could be a bullish sign for the Dollar. “This is naturally a negative development for gold.” Yields on US Treasuries, seen as a direct competitor to gold that also offers a coupon, have been touching their highest levels in months, making it more compelling to own bonds compared to commodities. premiums that do not deliver a return. The yield on the 10-year Treasury note TMUBMUSD10Y, 1.297% touched a high of 1.33% on Wednesday, putting the government bond near its highest level since late February 2020. Rising interest rates have created downward pressure on gold as they make the dollar and bonds “relatively more attractive as stores of value than gold,” said Jason Teed, co-portfolio manager of Gold Bullion Strategy Fund QGLDX. Still, a price record for the metal “is not out of the realm of possibility” if interest rates “remain suppressed and inflation concerns rise as the economy recovers.” April Gold GC00, -1.52% GCJ21, – 1.52% fell $ 26.20, or 1.5%, to settle at $ 1,772.80 an ounce, after drifting 1.3% on Tuesday. The yellow metal recorded the lowest result for a more active contract since the end of June. “In general, the markets are optimistic about an economic recovery “as The rollout of the COVID-19 vaccine continues, David Russell, GoldCore’s chief communications officer, told MarketWatch. “Updates on the next round of stimulus may well continue with the asset class inflation we are currently seeing and some of this is sure to flow into gold.” The market, however, will wait to see the death cross unfold, he said. Technically, gold is “looking soft,” although there should be good support around the $ 1,755 to $ 1,765 level and below that, support is at $ 1,700, Russell said. Meanwhile, minutes from the Federal Open Market Committee’s January meeting released Wednesday after the gold futures liquidation showed that committee members have seen an increase in downside risks to employment and inflation. . Gold’s losses also follow US economic data on Wednesday, with retail sales increasing 5.3% in January, the biggest increase in eight months, a positive sign regarding consumer health amid the pandemic. of COVID-19. Industrial production also increased 0.9% in January, to mark a fourth consecutive month. Also among Comex metals on Wednesday, silver for March delivery SI00, + 0.11% SIH21, + 0.11% closed a penny, or less than 0.1%, lower at $ 27,315 an ounce. March HGH21 copper, -0.27% lost almost 0.4% to $ 3.8205 a pound. April PLJ21 platinum, -1.62% lost 1.7% to $ 1,257.70 an ounce and March PAH21 palladium, -0.74% ended at $ 2,369.70 an ounce, down 0.8%.