Gold gives up gains as bonds slump
Gold has given up earlier gains of around 0.6% and some, to hit its lowest since March below $1890. Rising government bond yields continue to increase the opportunity cost of holding low- and zero-yielding assets, such as gold, silver and yen.
As well as rising bond yields and US dollar, you have concerns about demand from China where the economy is evidently at a standstill. China, as a nation, is a major gold consumer. So, when they are not doing so well, this tends to impact demand or perceived demand for the metal in a negative way.
The fact that gold had bounced back earlier had a lot to do with short covering at oversold levels, and temporary respite for the dollar. So now that it is falling again should come as no surprise.
A close below $1893, the June low, will keep the bearish bias intact heading into the latter parts of the week. There are no major prior reference points to watch from here until 1858ish, the base of the prior breakout in March.
The bulls will need to remain patient and await a key reversal pattern. For example, a rally off the lows and close back above $1893 would be an ideal scenario as this will have created a false break reversal. But the odds of that happening in this macro environment is slim.
By Fawad Razaqazada, market analyst with FOREX.com
As well as rising bond yields and US dollar, you have concerns about demand from China where the economy is evidently at a standstill. China, as a nation, is a major gold consumer. So, when they are not doing so well, this tends to impact demand or perceived demand for the metal in a negative way.
The fact that gold had bounced back earlier had a lot to do with short covering at oversold levels, and temporary respite for the dollar. So now that it is falling again should come as no surprise.
A close below $1893, the June low, will keep the bearish bias intact heading into the latter parts of the week. There are no major prior reference points to watch from here until 1858ish, the base of the prior breakout in March.
The bulls will need to remain patient and await a key reversal pattern. For example, a rally off the lows and close back above $1893 would be an ideal scenario as this will have created a false break reversal. But the odds of that happening in this macro environment is slim.
By Fawad Razaqazada, market analyst with FOREX.com
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