Home Stock Market Gold fell due to high new home sales boosting Treasury yields

Gold fell due to high new home sales boosting Treasury yields


Gold futures fell on Friday, as data showed strong new home sales in the US spurred yields on treasury bonds, reducing the investment attractiveness of the precious metal.

Brien Lundin, editor of Gold Newsletter, told MarketWatch: “Gold hit a double bottom in March and slowly bounced back,” Brien Lundin, editor of Gold Newsletter, told MarketWatch, referring to tissue. the chart pattern signals a potential bullish reversal. Over the past week, gold has had an “impressive streak as both the 10-year Treasury yield and the dollar index fell.”

However, the US Census Bureau reported that Friday New home sales in the United States occur with a seasonally adjusted annual rate of 1,021 million in March – the fastest pace of new home sales since 2006.

Lundin said the data “was surprisingly positive enough to drive yields higher, and then gold lower.”

In other US economic data on Friday, read a quick read about US IHS Markets. The General Purchasing Managers’ index has risen by one record high of 62.2 in April from 59.7 in March, it shows that both the manufacturing and service sectors are recovering rapidly from the coronavirus pandemic.

Gold prices managed to find some support this week, however, before falling on Friday, when investors looked at global COVID-19 hotspots and their likelihood of derailment. global economic recovery after the pandemic.

Gold delivered in June
GC00,
-0.29%

GCM21,
-0.29%

fell $ 9.50, or 0.5%, to $ 1,772.50 an ounce on Comex, while silver in May
SIK21,
-0.50%

down 19 cents, or 0.7%, to $ 25.99 / ounce.

Read Global silver demand is poised to increase this year; Price may increase more than 30%: report

Friday’s slump in two precious metals drove prices down for the week, with gold, based on the most active trading contracts, down 0.3% weekly, while silver fell 0.4%. .

Cases of rising COVIDs in India and Japan in particular are said by analysts, which have reduced expectations for a global economic recovery, dragging Treasury-bond yields down for the week, and supporting funding. production is not as profitable as gold.

On Friday Tokyo and Japan’s second largest metropolitan area is Osaka again saw new consumer and business bans in place to prevent increased cases of coronavirus.

Carsten Fritsch, an analyst at Commerzbank, said, to have a new push to $ 1,800 an ounce, the market will need to see a trend reversal in gold exchange trading capital, including Some signs, Carsten Fritsch, analyst at Commerzbank, said.

He noted that momentum in ETF cash flow has slowed, with average daily cash flow in April reaching 1.5 tonnes, compared with nearly 6 tonnes in March.

“We expect ETF inflows and gold prices to rebound in the second half of the year,” he wrote.

“After all, the environment for gold will light up dramatically. As the Fed will continue to maintain an extremely loose monetary policy for a long time, bond yields and the US dollar will decline from the middle of this year. Thus, the headwinds will turn into headwinds, ”said Fritsch.

Other arguments for the higher gold price include negative real interest rates, record high government debt and a rapidly growing money supply, he said, as Commerzbank is looking for the price of gold to rise to $ 2,000 per ounce by year-end. .

For now, however, prices are likely to see more of the “current reciprocity between gold, bond yields and inflation data” in the future, said Lundin of the Gold Newsletter.

“I am confident we saw last month’s low and gold will tend to move higher as the idea of ​​inflation persists in investors,” he said. “No matter what the Fed does in the long run, the size of the federal debt requires it to sustain rate hikes after inflation. As investors increasingly understand this dynamic, they will increase their allocation to gold.

In other transactions on Comex Friday, May, copper
HGK21,
+ 1.38%

up 1.1% to $ 4.32 / pound, ready to gain 3.8% weekly.

Copper prices are likely to stabilize above the highs seen in February, which should bring prices to their highest levels since 2011.

“Latest series of strong economic data shows that overall demand remains good in the coming months, as the global recovery continues.
Acceleration and supply continue to decline, ”analysts at Sevens Report Research, wrote in Friday’s newsletter.

Also on Comex, July palladium
PLN21,
+ 1.85%

rose 1.4% to $ 1,225.10 / ounce, trading 1.4% higher for the week. June Palladium
PAM21,
+ 0.48%

increased 0.3% to $ 2,851.50 / oz, with weekly increase of 2.8%.

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