Gold’s rout is not yet done. Prices sank below $1,900 (Dh6,973) an ounce on Tuesday, extending the precious metal’s slump into a second day after the haven lost more than 5 per cent in the week’s opening session.
After setting a record above $2,000 an ounce last week, gold’s rally has come to a juddering halt as US bond yields advanced, eroding the haven’s appeal. The swift drop followed modest outflows from gold-backed exchange-traded funds, and a 15-day run in overbought territory for the relative strength index.
Gold had been on a tear in 2020, and the reversal represents a challenge for the metal’s backers. The haven has been favored as the coronavirus pandemic pummeled the global economy, prompting central banks and governments to deploy massive stimulus.
On Monday, President Vladimir Putin said Russia cleared the world’s first Covid-19 vaccine for use, buoying appetite for risk.
“Once it got to $2000 per ounce, in a lot of investors’ minds that could have been an opportunity to take profit off the table,” said Gavin Wendt, senior resource analyst at MineLife. “The real trigger [was] the news last night about Russia’s Covid-19 vaccine, which was a cue for some investors to take profit from their gold positions and to leap back into equities. It’s a high-risk play, but if you’re sitting on profits, it’s quite a sound strategy.”
Spot gold sank as much as 2.1 per cent to $1,872.61 an ounce and traded at $1,885.33 at 10:40am in Singapore (6:40am in the UAE), as gold futures tumbled on the Comex. Silver also dropped sharply, with futures losing more than 9 per cent at one point to trade below $24 an ounce.
On Monday, DoubleLine Capital's Jeffrey Gundlach said that he expects gold to keep trading higher despite the setback. Among banks that have forecast substantial gains in recent weeks, Bank of America has predicted that prices will advance to $3,000.
Benchmark Treasury yields have climbed more than 10 basis points so far this month, amid improving risk appetite and an imminent flood of debt issuance. The recent rebound reflects investor hope that the coronavirus will be contained amid Russia’s vaccine, according to Standard Chartered.
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
The biog
Profession: Senior sports presenter and producer
Marital status: Single
Favourite book: Al Nabi by Jibran Khalil Jibran
Favourite food: Italian and Lebanese food
Favourite football player: Cristiano Ronaldo
Languages: Arabic, French, English, Portuguese and some Spanish
Website: www.liliane-tannoury.com
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