Gold may fall in price by 5% in a week
Gold is depreciating and may close for the fourth consecutive auction for the second time since the beginning of the year, as the sharp rise in government bond yields weakened demand for the precious metal. Over the week, gold may fall in price by 0.9%, over the month – by 4.9%.
Gold futures could also post a weekly decline for the second straight week and fall in a month for the second time in a row, with the rate of decline in February being the highest since November, according to FactSet.
Gold futures with delivery in April at 18:13 Moscow time on Friday dropped in price by $ 38.6 (2.17%) – to $ 1,736.8 per ounce. Since the beginning of this week, contracts have dropped 2.6%.
“Gold is once again in trouble and the short-term outlook for the metal does not look good,” said Craig Earlam, senior market analyst at Oanda, quoted by MarketWatch.
The growth in government bond yields is forcing investors to revise the composition of their portfolios, which puts pressure on other assets.
The yield on 10-year US Treasuries on Thursday touched an intraday high of about 1.54%, up from 1.34% last Friday. Meanwhile, five-year bond yields have surged the most since 2010, according to Dow Jones Market Data. On Friday, the yield on 10-year US government bonds by 18:29 Moscow time was at the level of 1.52%, the yield on five-year securities – at 0.81%.
Key drivers of the sell-off in bond markets are progress in coronavirus vaccinations and hopes for economic recovery from the coronavirus pandemic in the second half of 2021. Prices for government bonds are declining amid rising yields.