Gold plummets to two-month lows, below $1800 mark
The precious metal witnessed heavy selling for the third consecutive session on Thursday and was pressured by a combination of factors. The US Treasury bond yields continued scaling higher amid firming expectations for a massive US fiscal spending, which, in turn, drove flows away from the non-yielding yellow metal.
The US bond yields rose further following the release of better-than-expected US Initial Weekly Jobless Claims. Positive US economic data, along with the progress with coronavirus vaccinations lifted hopes for a strong economic recovery and benefitted the US dollar. This was seen as another factor weighing on the dollar-denominated commodity.
Will interest rate increase cause Gold to plunge in 2021?
The decline in the real interest rates is the most important downside risk for gold. Will it materialize, plunging the price of the yellow metal?
The rise in inflation is the most significant upside risk for gold this year, but there are also a few important downside risks. The most disturbing for us is the possibility that the real interest rates will increase. Why? Please take a look at the chart below.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.