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Written by Parani Krishnan
Investing.com – Gold prices continued to decline on Wednesday, dropping to 3-month lows, falling below $ 1,800 an ounce, as the United States rose sharply due to US yields, US stocks fell, as investment funds reaped profits and reallocated.
It declined at settlement from $ 20.45, or 1.1%, to $ 1,778.55 an ounce, after falling 1.3% in the previous session.
In total, since February 10, gold has fallen by $ 65, or 3.5%. Gold fell to $ 1,768.55 an ounce on Wednesday, a low gold hit in November when it hit $ 1,767.20 an ounce.
“The problem is with returns,” says Fawad Razakzadeh of Think Markets. “Investors are now focusing on Treasury bill yields, which continue to rise as the global economy recovers, and are expected to gain momentum.”
“As a result, investors are turning away from bonds, causing yields to rise. The news has pushed the dollar up and put pressure on US stock indices.”
The 10-year Treasury yield rose to 1.33%, its highest level in a year.
The dollar, gold’s supreme enemy, has risen. The US dollar index, which measures the performance of the currency against a basket of 6 currencies, reached 90.88. There are bets that the dollar index will drop back to 91 which will put pressure on gold. “
“The dollar seems to be driving returns, and the rise in bonds has resulted in an increase in strength,” says Craig Erlam of OANDA. “And gold could now be heading towards $ 1,700 an ounce.”
Meanwhile, Eric Scholes, strategist at Blueline Futures, sees the same thing: “If we don’t see market rejection for these prices, and thinking that inflation will come, I see gold go down to $ 1,700l ‘once in the near future. “
Gold is a means of protection against inflation, and it is also a safe haven against economic and political problems, amid the challenges expected in the months to come, and since the impressive results of treatments against the Corona virus. Gold fell sharply from $ 2,090 an ounce, recorded last August.
And with an expected $ 1.9 trillion stimulus package, on top of previous $ 4 trillion packages, it went through the Trump administration. The US deficit is likely to increase and debt will increase, putting more pressure on the dollar than gold. The dollar continues to move above the $ 90 level, violating bearish logic.
If inflation returns, gold will benefit from this inflation. As geopolitical risks diminish, the safe haven position in gold is declining, and gold is now falling instead of rising.
While some believe that a currency captures the spark of gold, digital currency has now reached the level of $ 52,000, with increasing institutional acceptance of digital currency.
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