A surge in US real yields pushed down XAU/USD in February. While strategists at Capital Economics don’t expect US real yields to rise much more if at all, reduced safe-haven demand as the global economy recovers will mean that the gold price falls a little further over the course of this year.
“The price of gold continued to fall in February, and now sits close to an eight-month low. This has been primarily due to the significant rise in real yields over the last two weeks. Outflows from gold ETFs also continued, reflecting reduced investor demand for safe-havens.”
“While the price of silver also declined over the past month, this was largely a reflection of heightened price volatility at the start of February. The silver price is still above its level at the start of the year and is high relative to the price of gold, potentially as a result of the recent rally in industrial metals.”
“Finally, platinum and palladium prices rose. In the case of platinum, this came despite a decline in investor demand, suggesting that industrial demand may be contributing to the recent rally. Meanwhile, the palladium price looks to have been boosted by a surge in the price of rhodium, a substitute metal.”
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