Investing.com – The resolve of the gold bull is facing an all-new test with prices of the yellow metal breaking below $1,700 an ounce for a second day in a row after remarks on the U.S. economy by Federal Reserve Chairman Jay Powell sent bond yields and the dollar soaring.
Gold futures on New Yorkâ????s Comex snapped below $1,700 on Wednesday, the first time since April last year, and were back below those levels after Thursdayâ????s official session on the exchange. The spot price of gold, which reflects real-time trades in bullion, hit $1,600 territory the first time since June on Thursday.
Gold for April delivery
on New Yorkâ????s Comex settled down $15.11, or 0.9%, at $1,700.70 an ounce. By 2:10 PM ET (19:10 GMT), some 40 minutes after the official session, it traded at 1,695.10, after hitting a low of $1,687.75.
was down $13.25, or 0.8%, to $1,697.89, after a bottom $1,690.72. Hedge funds and other money managers sometimes rely more on the spot price than futures for determining direction in gold.
The yield on the benchmark
U.S. 10-year bond
rose to nearly 1.55% after Powell admitted at an event hosted by The Wall Street Journal that a recovering economy could « create some upward pressure on prices,â???? before adding that any rise in inflation would be « transitory ».
Powell’s comments pulled down a stock market that in recent days had seen investors questioning the valuations of high-flying tech stocks such Apple (NASDAQ:
), Microsoft (NASDAQ:
) and Amazon (NASDAQ:
Gold, already in meltdown mode for some time, got swept into the stocks rout despite its so-called inflation hedge and the imminent passage expected for President Joe Bidenâ????s $1.9 trillion Covid-19 relief bill.
The dollar, the alternative trade to gold, soared with the
, which pits the greenback against six major currencies, hitting a four-month high at 91.68.
Since Feb. 22, the benchmark gold futures has lost $115, or nearly 6.5%. In Tuesdayâ????s trade, its only positive session in the past seven, it rose just around $10, or 0.6%. For the year, gold is down almost 10%.
Traders now await the U.S. Labor Departmentâ????s release of the
February jobs report
. The marketâ????s consensus is for a growth of 180,000 jobs last month, above Januaryâ????s 49,000 expansion. Much higher growth could again weigh on the yellow metal.
â????Gold bulls are getting dizzy as they look over a cliff of price action that could see another $100 of weakness,â???? said Ed Moya, analyst at New Yorkâ????s OANDA. â????If the bond market continues to ignore the Fed, gold could be in for a few rough weeks.â????
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