Gold slides further below $1500 mark, losing around 2.5% for the day
|- Gold failed to capitalize on the early uptick despite a fresh leg down in equity markets.
- The benchmark 10-year US bond yields jump to 1.2% and exerted some fresh pressure.
- The global rush to hoard cash benefitted the USD and contributed to the selling bias.
Gold extended its sharp intraday slide and weakened farther below the key $1500 psychological mark through the early European session.
The precious metal failed to capitalize on the overnight goodish intraday bounce and an early uptick to the $1546 region. Traders seemed rather unimpressed by a fresh leg down in the global equity markets, which tends to undermine the commodity's perceived safe-haven status.
A strong follow-through rally in the US Treasury bond yields turned out to be one of the key factors that exerted some fresh downward pressure on the non-yielding yellow metal. In fact, the yield on the benchmark 10-year US government bond jumped back to 1.2% on Wednesday.
This coupled with a sudden pickup in the US dollar demand added to the intraday selling bias surrounding the dollar-denominated commodity. The greenback benefitted from its status as the global reserve currency and a rush to hoard cash to ride through the coronavirus crisis.
However, growing concerns over the economic fallout from the coronavirus pandemic – despite the recent efforts from major central banks and various government measures to offset recession fears – might lend some support to the commodity.
Hence, it will be prudent to wait for some strong follow-through selling, possibly below the recent swing lows to over one-month lows, around the $1450 region, before positioning for any further near-term depreciating move for the metal.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.