Daily Market Recap - Gold breaks down below 1,700 per ounce

The price of gold is getting penalized by the steepening of the rate curve and the rise in yields of US government bonds at the start of the week.

The yield on the 10-year US Treasury bond continued to rise, rising 3 basis points to 1.747 percent. The benchmark market rate rose to 1.78 percent on Tuesday, its highest level since January 2020. It had hit a low of 0.915 percent earlier this year.

The rise in bond yields, prompted by the improved economic outlook and fears of rising inflation in the United States, is weighing on the yellow metal. Investors have decided to focus on the sectors most likely to benefit from the recovery, thus abandoning gold, which is known for its safe-haven status.

Nevertheless, some analysts are concerned about the joint rise in equity markets and bond yields, a phenomenon often considered to herald a coming consolidation.

Graphically, the yellow metal is failing to regain its footing, and sellers continue to put strong pressure on prices. Furthermore, the market is trying to make a new low following the break of the 1,703 per ounce mark,

In the short term, we could see a consolidation phase in a range between $1,750 and $1,680. A new price rotation towards the opposite boundary accompanied by a breakout would allow us to reach $1,790. As a reminder, gold prices have been locked in a bearish channel since August 2020, so a break of the upper bound should lead to a resumption of the bullish bottom dynamic.

However, if the support at $1,680 gives way under selling pressure, then gold risks continuing its fall to reach the next key technical level around $1,625.

(Chart Source: Tradingview 30.03.2021)

To summarize, Gold is trapped between two major levels, resistance at $1,750 and support at $1,680. As such, only the breakout will set the tempo for the rest of the week, but the bearish risk should continue to linger in the near term.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.