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March 3, 2024
PI Global Investments

Gold nears $2000 as higher bond yields weigh

Gold has fallen to a one-month low as the market loses faith in imminent cuts from the Federal Reserve and other central banks. Today’s US retail sales report underscored the point as the control group rose 0.8% compared to 0.2% expected.

Gold was flat coming into US trading but it’s down $19 to $2008 now, breaking the January low of $2013.

Gold daily

Typically, gold rallies on January on a strong seasonal effect but that hasn’t been the case this year as it’s run into a reversal in Treasury yields and expectations about rate cuts. It may also be suffering on the physical side as malaise in China’s economy deepens and jewellery buyers balk.

I expect that central banks in Russia, China and the Middle East will be eager buyers at some point and I’ll be watching to see if $2000 holds. If not the December 13 low as $1972. Note that this was the day of the last FOMC and a dovish turn from Powell. That low has been erased on a number of USD crosses so I wouldn’t be surprised if gold did the same.

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