Gold prices continued to fluctuate above $1720 in early Asian trading, but have fallen below the threshold and continue to show a bearish trend. The signing of the novel coronavirus fiscal stimulus bill of the United States provides temporary support, and US Treasury yields have now rebounded and stabilized after falling, prompting gold prices to break away from the narrow price range, and the wave of selling pressure continues to unfold.
As of 11:37 Hong Kong time before the press deadline, the price of gold fell 0.32 per cent to US $1717.60. Gold's 15-minute icon shows that gold has moved away from its narrow price range or triangle, making it harder to recover to a high of $1740 on March 2.
Gold failed to break its high of $1740 on March 2 and has since fallen back to $1720, down more than $20, suggesting that gold has so far failed to recover from the impact of Treasury yields.
After the ECB meeting and a press conference by ECB President Christine Lagarde, and before the results of the 30-year Treasury auction, US Treasury yields rose from 1.475 per cent to 1.546 per cent. The move provides some support for the dollar, although the latter is still weak.
Gold's current performance is in line with a bearish view from the longer wick at the top of the candlestick on Thursday, suggesting that it is possible to retest its recent low of $1676. For now, gold needs to close $1740 above Thursday's high to invalidate the selling pressure.
Analysts point out that the main underlying concern behind the rise in US Treasury yields appears to be a strong belief in a strong rebound in inflation in the developed world. While higher commodity prices will lead to a surge in inflation, markets suggest that huge fiscal expansion in major economies over a common period could lead to a resurgence of inflation.
He believes that the launch of the novel coronavirus vaccine in the United States and strong fiscal stimulus support are actually reducing the optimistic outlook for economic recovery.
