FXEMPIRE
All
Ad
Advertisement
Advertisement
James Hyerczyk
Add to Bookmarks
Comex Gold

Gold futures are edging lower on Wednesday, pressured by a firmer U.S. Dollar ahead of the European Central Bank (ECB) announcements on Thursday, another rise in U.S. Treasury yields and increasing demand for riskier assets with U.S. equity markets hovering slightly below record highs. Despite having its gains capped, the market appears to be underpinned by some inflows into the safe-haven metal due to concerns over a surge in COVID-19 cases.

At 10:38, December Comex gold futures are trading $1808.10, down $7.10 or -0.39%.

Advertisement
Know where Gold is headed? Take advantage now with 

Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

COVID-19 Fears, Weak Euro Push US Dollar Higher

Currency markets still showed signs of risk aversion on Wednesday after global markets were spooked earlier in the week by surging COVID-19 infections, with the safe-haven dollar rising to its highest since early April. A strong U.S. Dollar tends to reduce foreign demand for dollar-denominated demand gold.

The Delta variant of coronavirus has replace inflation as investors’ primary source of concern this week, prompting global stocks to drop sharply on Monday, Reuters wrote.

In a quiet day for economic data, currency markets are looking ahead to the European Central Bank (ECB) meeting on Thursday. A dovish tone is expected after ECB President Christine Lagarde foreshadowed a guidance tweak during an interview last week. A weaker Euro tends to weigh on gold prices because it drives the U.S. Dollar higher.

The ECB announced a new strategy which allows the bank to tolerate inflation above its 2% target, and Lagarde said policy guidance would be revisited to demonstrate the bank’s commitment to the new goal.

Advertisement

Treasury Yields Rise, 10-year Climbs to 1.23%.

U.S. Treasury yields rose on Wednesday morning, with the 10-year rate climbing to 1.23%.

The yield on the benchmark 10-year Treasury note added 2 basis points, rising to 1.236%. The yield on the 30-year Treasury bond rose 3 basis points to 1.9003%.

Gold futures rose and Treasury yields sunk at the beginning of the week, with the 10-year rate hitting a five-month low, amid concerns about the rapid spread of COVID-19 variants and rising inflation.

US Stock Market Futures Up Ahead of Cash Market Opening as Comeback Rally Continues

U.S. stock futures are higher early Wednesday as equities continue their rebound from a one-day rout to start the week. The stabilizing bond market is one reason for the recovery in the stock market.

The yield on the 10-year Treasury dropped to a new 5-month low on Monday, before stabilizing on Tuesday. The drop in rates is unnerving equity investors by signaling a possible slowing economy due to spreading COVID-19 variants or a possible Federal Reserve mistake.

Daily Forecast

Although gold futures appear listless, our experience tells us that this may be the calm before the storm as often we see a jump in volatility following this type of price action.

Some strategists see the stock market heading into a volatile period, in which there could be deeper pullbacks. Investors are juggling inflation concerns as well as new COVID cases are rebounding in the U.S. as the delta variant spreads. This could also be the source of volatility for gold.

Gold has shown almost no reaction to falling Treasury yields, which suggests prices should be higher. However, it’s the strong dollar that is capping gold’s gains. If conditions stay the same then gold is likely to fall sharply. I think gold is going to have a hard time rallying as long as investors see the U.S. Dollar as a safe-haven.

For a look at all of today’s economic events, check out our economic calendar.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker