Wednesday (January 6) evening, the gold market suddenly appear big single smash, COMEX most active gold futures contract in January 6, 20:43-20:44 Beijing time two minutes trading plate instant turnover of 8153 lots, the total value of trading contracts more than 1.57 billion U.S. dollars. Gold prices short setback of more than $ 20, hit a low of $ 1925, after rebounding to 1940 mark above.
After the opening of the U.S. market, gold prices continued to move lower, below $1910 per ounce, down more than $50 from the daily high, down nearly 2% during the day. Spot silver was down 3% at $26.64/oz, and spot platinum was also down 3%.
The European Commission formally approved Moderna’s new crown vaccine in the evening. European stocks continued to move higher in late trading, with the UK FTSE 100 jumping 3.7%, Spain’s IBEX 35 up 3.5%, Italy’s FTSE MIB up 2.57% and the Euro Stoxx 50 up 1.82%.
Behind the decline in gold prices, investors need to keep an eye on the 10-year U.S. bond yield, which broke above the 1% barrier for the first time since March last year. Gold prices and ten-year U.S. bond yields have been showing a significant negative correlation. Joel Frank, an analyst at financial website Fxstreet, pointed out that rising U.S. nominal and real bond yields appear to have put pressure on the precious metals market, which fell across the board on Wednesday. Higher bond yields tend to reduce the incentive to hold precious metals rather than bonds, hence the weakness in the precious metals market today.
The U.S. dollar index has now fallen to its lowest level since 2018, and U.S. stock index futures have also declined. Investors believe that a climb in U.S. Treasury yields from 1% to higher levels, accompanied by economic recovery and inflation, could trigger a domino effect across asset classes.
And as for whether inflationary pressures will lead the Fed to raise interest rates, ColumbiaThreadneedle analyst Ed Al-Hussainy said the Fed is likely to intervene only if yields move higher again, jeopardizing the current accommodative financial environment. He believes the 30-year U.S. Treasury yield is likely to rise to 2.25%-2.50% from the current 1.78%. VishnuVarathan, head of economic strategy at Mizuho Bank in Singapore, also said.
“If the growing uncertainty is resolved, the 10-year U.S. Treasury yield is expected to rise to 1.5%-2% in the near term.”
The progress of Georgia’s runoff election triggered a wave of sentiment this morning, and the news is still confusing, with the final results expected to be determined by midday local time on Wednesday (around 0000 GMT on Thursday). However, the market is now widely expecting that the final results of this election will be delayed, and even a recount cannot be ruled out.
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