On Thursday evening (Feb. 4), spot Gold plunged 2% below the 1790 mark, down more than $45 from its daily high and continuing to set a new low since Dec. 1 last year. Spot silver also plunged 3%, breaking below the $26 mark for the first Time in a week.
Ten-year U.S. bond yields approached 1.16% from near 1.13% overnight, putting more pressure on gold prices.
According to the U.S. Treasury’s latest refinancing statement, the U.S. will also sell $126 billion in long-term bonds next week. The increase in the supply of U.S. bonds threatens to further cause U.S. bond yields to move up in the short term, following several U.S. bond auctions in which ten-year U.S. bond yields have seen short term moves upward. The Treasury Department’s specific bond auctions are as follows.
An auction of $58 billion of 3-year Treasuries on February 9, the same size as in January but $4 billion higher than last November.
An auction of $4 billion of 10-year U.S. bonds on Feb. 10
Auction of $27 billion of 30-year U.S. bonds on Feb. 11.
In addition to the trend in U.S. bond yields, the recent pressure on gold prices are also more optimistic U.S. economic data.
The U.S. initial jobless claims released on Thursday evening were the lowest since November 28, indicating that the U.S. economy continues to recover slowly from the new crown Epidemic, and renewed jobless claims also continued to fall, down 193,000 from the previous week to 4.6 million, peaking at 24.9 million in May last year.
The January ADP employment numbers released on Wednesday recorded an increase of 174,000, far exceeding the expected increase of 49,000, with the previous value revised upward from a decrease of 123,000 to a decrease of 78,000. U.S. non-manufacturing employment index and ISM non-manufacturing PMI data in January recorded the highest level since March 2020.
In addition, some high-frequency data, such as the weekly consumer confidence index and restaurant reservations, also showed some degree of strength. Both credit and debit card data collected by Bank of America showed a rebound in consumer spending.
Jefferies LLC economists Markowska and Simmons believe that February will be the inflection point for economic growth to accelerate.
The U.S. Labor Department will release January employment data at 21:30 on Friday. Economists’ forecasts for the change in non-farm payrolls vary widely, from a decrease of 250,000 to an increase of 400,000, but the median expectation is an increase of 50,000, which is expected to rebound from last December’s slump (the previous value was a decrease of 140,000); the unemployment rate is expected to register 6.7% in January, unchanged from the previous value. Optimistic non-farm payrolls fear further pressure on gold prices.
Sungwoo Park, an institutional analyst, noted that gold’s safe-haven appeal has waned as the market feels optimistic about vaccinations and stimulus measures. The rush of investors to buy gold ETFs has also stalled. Meanwhile, Inflation expectations, as measured by the U.S. two-year profit-and-loss balance inflation rate, are losing momentum after a recent surge, which could put upward pressure on real yields and further hit gold prices.
The gold ten vip risk warning report mentions that a fall in gold prices below 1800 fears inviting more short positions into the market and could open up room for further pullbacks, with 1786-1787 being the first support level to watch next.
Adam Button, an analyst at the financial website Forexlive, pointed out that gold prices fell below $1,800, falling below the January low from a technical point of view is not optimistic. Gold’s seasonal rally is weakening, and fundamental factors are not playing a driving role. Inflation and deficit concerns are building, but they are too deep for the market to focus on. The massive retail buying of silver (and gold, just on a smaller scale) has collapsed this week. the December low of $1,764 is key and gold is likely to test that position.
Commerzbank analyst Daniel Briesemann says gold is under technical pressure, triggering a follow-through technical sell-off after falling below its 200-day moving average. Below $1,800 we could see gold prices move lower in the near term.
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