The price of gold declines on Wednesday due to the strengthening of the dollar, falling below $1,800 an ounce.
The price of April gold futures on the Comex sank 0.55% or $9.95, to $1,789.1 per troy ounce. At the same time, March silver futures reported a slight rise by 0.03% to $27.332 per ounce. Following the results of the past week, the most actively traded gold futures increased by 0.6%, reporting a weekly increase for the first time since January 22, while silver quotes gained more than 1%.
However, the price of the main precious metal is steadily declining for six consecutive sessions. A significant blow to the quotes was caused by the growth in the yield of US government bonds, which previously showed a maximum since March 2018. Many analysts see the increase as a reflection of the current situation, where investor risk is driven by hopes for successful vaccination. Moreover, investors also have great expectations with the negotiations on the package of state support for the US economy, which was proposed at $1.9 trillion.
The increase in the yield on US Treasury bonds supports the dollar, which is becoming a negative factor for gold, increasing its value for holders of other currencies. The dollar index is growing by 0.13% to 90.63 points.
Many experts believe that, at present, the gold market lacks incentives that could contribute to a confident rise in precious metals prices, so the general mood of its participants remains rather pessimistic. Obviously, the precious metals market needs positive news, the absence of which forces short-term investors to be wary of new investments in gold.
An additional negative factor for reducing the cost of the metal was the publication of the manufacturing index calculated by the New York Fed. For the current month, the indicator increased by 8.6 points, to 12.1 points, which was the maximum since July 2020. Economists predicted that the figure would be 5.9 points. An index reading above zero indicates an improved business environment.
At the same time, the CBOE volatility indicator, better known as the Wall Street fear indicator, adheres to average levels. After the stock market crash in March 2020 due to the outbreak of the coronavirus pandemic, the index remains elevated. A decline in the indicator most often indicates an increase in demand for risky assets (stocks) and a fall in demand for safe-haven assets (bonds and gold).
Experts say that the decline in gold prices will be limited to the current week. While demand for physical gold in Asia will go through a cyclical decline, analysts predict purchases of ETFs and physical gold from value-oriented investors starting Wednesday in Asia-Pacific and London. Experts argue that this will limit the current sell-off, however, the overall trend for gold may remain downward.
As for the other metals traded on the Comex, most of them closed higher. Thus, March copper futures gained 1.2%, having reported $3.834 per pound. April platinum futures showed a solid gain of 1.6% to $1,279.60 an ounce. Meanwhile, March palladium futures gained 0.2% to $2,388.20 an ounce.
