The Magazine for Asian Investors
Gold futures fell more than $30/ounce, after rising to $1,776.13/ounce, however, gold failed to sustain the uptrend. Although supported by the dollar index, which fell 0.38% to 93.082, gold could not really take off. Investors see the stock market as a more profitable alternative at the moment.
Gold futures fell $30 to $1,745.90/ounce at 8:00 PM ET
The following key factors are currently putting pressure on the gold price.
- The yield on 10-year U.S. Treasury bonds rose to 1.4387%, its highest level since early July.
- Investors see the stock market as a more lucrative alternative for investment at the moment. This is mainly due to the fact that the Federal Reserve announced on Wednesday to maintain the current monetary policy. Thus, the market continues to be supplied with ample liquidity. The surge in liquidity has pushed equity indexes to new records this year.
- Positive labor market numbers and the ongoing recovery of the COVID-19 pandemic do not make investors feel the need to invest in safe havens like gold at the moment.
- Transitory Inflation. The Fed has already indicated since the rise in inflation figures that inflation is only transitory at the moment. The Fed is based on the assumption that supply bottlenecks for some goods are responsible for this.
In addition, investors initially put aside their concerns about Evergrande’s situation. After it was reported that Evergrande was able to reach an agreement on a bond payment and the People’s Bank of China injected a large amount of money into the system. This led to a widespread incentive to sell into safe-havens.
However, the Evergrande situation is still on a knife-edge. According to reports, Evergrande was unable to make the second bond payment. Still, the company has a deadline of 30 days before the bond default can be announced.
All these factors let the gold price come down further for the time being in the short term. In the long term, however, the gold price could rise because the high inflation and the massive federal debt are bullish factors for the gold price.
Other precious metals:
Silver falls 0.11% to $22.438/ounce.
Palladium fell 1.99% to $1,876.00/ounce.
Platinum fell 2.03% to $964.00/ounce.