Gold futures contracted on Monday, giving up on previous gains as government bond yields continued to pick up and the US dollar strengthened ahead of the Federal Reserve meeting on monetary policy later this week.
Precious metal prices initially climbed on Monday “ahead of what is expected to be another ion policy meeting for ion approval later this week, and as COVID and lock-in news strengthen the chances for more global financial and financial stimulus,” Edward Moya said. , Senior Market Analyst at Oanda, in Market Update.
Ahead of the Fed’s two-day policy meeting, which ends Wednesday, “gold should stabilize at $ 1,850 to $ 1,900,” Moya said.
“Gold’s forecast is still bullish mainly because of ion commitments” by Fed Chairman Jerome Powell and Finance Minister nominee Janet Yellen, he said. “The next two weeks are big for fiscal negotiations and that should be critical to Gold’s short – term forecast.”
GC00 Gold February,
Fell $ 6.50, or nearly 0.4 percent, to $ 1,849.70 an ounce, after making a weekly gain of 1.4 percent on Friday.
Money for shipping March SI00,
Down 30.6 cents, or 1.2%, to $ 25.25 an ounce, after a weekly gain of 2.8%.
The move to gold came when “the dollar picked up for another rally following a steady stream of negative European news that sent the euro down very low,” Moya said. US Dollar Index ICE DXY,
Added 0.3% to 90.50 in trades on Monday.
Gold traders have also been waiting for data on the health of the U.S. economy, and gross domestic product data is expected to arrive on Thursday.
“Certainly, the metal may see much higher volatility during this week, and the event that may have the most impact on gold prices will be the U.S. GDP number,” wrote Nam Islam, chief market analyst at Otrade, a daily research note.
The gold market is also awaiting updates on the prospects for a $ 1.9 trillion Corus virus relief package from recently imprinted US President Joe Biden, as well as further Fed guidelines on its liquidity plans, which have established financial markets.
Meanwhile, the bonds received an offer in Europe and it trickled down to the US market, with the Treasury bill for 10 years TMUBMUSD10Y,
A rate of 1.05%. Bond prices are rising and yields are falling.
Government bonds have responded to signs of COVID fragility in Europe, with growing talk of a double-digit recession in the eurozone amid fears of longer restrictions to curb the spread of the deadly pathogen.
Falling bond prices can help raise gold prices because commodities do not offer a coupon.
In another Comex trade, prices for March HGH21,
Fell 0.3% to $ 3,616 per pound. Platinum April PLJ21,
Lost 0.6% to $ 1,104.30 per ounce and palladium PAH21 in March,
Fell 1.5% to $ 2,330.50 an ounce.
“The bottom line is for both industrial and precious metals, as long as the longer-term downward trend in the dollar continues and growth and stimulus inflation expectations are maintained, then the metals should be able to continue its upward trend well into 2021,” analysts said recently in the Sevens Report.