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This morning, the precious metals market remains under pressure from a steady increase in the US Treasury yields. This problem appeared a few days ago and continues to weigh on gold and other metals that are already weak.
On the New York Exchange, gold futures contracts for April fell by 0.12%, or $2.15, this morning to reach a new level of $1,795.75 per troy ounce. Gold found support at $1,759, while resistance moved to the area of $1,815.2 per troy ounce. It is important to note that the precious metal continues to consolidate below the strategically important mark of $1,800 per troy ounce. Currently, there are no reasons for gold to test this mark.
On the other hand, silver futures for March rose by 0.84% this morning to settle at $28.093 per troy ounce.
The price of copper futures contract for May is also showing positive dynamics today. Copper grew by 0.7% in the morning session and moved to the level of 4.3585 US dollars per pound.
Market participants are concerned about gold that keeps extending its decline for the third trading session in a row. It has already broken below the important level of $1,800 per troy ounce. It will not be easy for gold to return to this level, especially when the rising yields of US government bonds continue to extend pressure on the precious metals market. This limiting factor emerged together with other challenges. Now it has become critical for the metals market as this problem seems impossible to cope with. Moreover, the growing US Treasury yields spur the rate of the national currency. All this is affecting the value of gold, which becomes more expensive for those who hold foreign currency.
The yield on the benchmark 10-year Treasury note has already exceeded 1.4 basis points, while in the previous session the gain was 1.403%.
Most experts believe that the precious metals are unlikely to overcome the crisis in the next quarter, and the prices will be mainly determined by the dynamics in government bonds. Meanwhile, some other factors indicate that gold will face a short-lived minor decline that will allow the yellow metal to retain its status as a safe haven asset. Thus, we just need to wait when gold regains ground.
Market participants also pay attention to the speech of Fed's Chair Jerome Powell which took place several days ago. The head of the Federal Reserve noted that the regulator did not intend to revise the key interest rate in the near future. He stressed that the country's economy still needed support that can stimulate the recovery from the coronavirus crisis. It became clear to investors that the inflation rate that has been rapidly growing in recent years is not of a big concern for the US government. This issue will become relevant only when the US economy shows the first signs of stabilization.
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