The Gold commodity enters 2021 with a high expectation behind the biggest increase in a year and highest record for a decade. However, what really happened is quite the opposite. That metal experiences its worst beginning in 30 years.
Gold is on its way to reaching the sixth decline in a row. That happened on Thursday. For your information, that is the longest period since the end of 2018. Furthermore, it also touches the lowest level in seven months and it means more.
That situation is deepening the commodity slump and falling through level support which the analyst thought that can make a double loss. That is why; the market participants are still high lighting any moves and updates on that commodity in the market.
Why the Metal Soared Last Year?
Is it a fact that metal soar sharply last year? There are several causes for that condition. One of them is because the purchase of shelter triggered by the low interest rate, coronavirus pandemic, and of course the stimulus plan made by Joe Biden as the new USA President.
Based on the data so far, gold has been declining by more than 6% in 2021. That is the worst performance in the commodity index of Bloomberg. You can say that the metal is suddenly facing obstacles that are never expected before.
On the other side, USD shows it’s strengthened and rally in US bond yields. That is caused by the economic indicator that shows a good recovery from the pandemic. The great condition is still ongoing and vaccination becomes the new hope to make everything is better.
With the interest rate that increases and the peaking inflation expectation, many experts see that so many take profit actions are happened in gold right now. Meanwhile, people are switching from gold to industrial metals. The example is copper and many more again in the market.
Gold Decline Data in 2021
The decline of 6.5% experienced by that metal in the 2021 spot is for sure the worst start in a year. It is even the worst since 1991 based on the data grouped by Bloomberg. The increase in Treasury yield for 10 years burdening bullion demand without interest.
That situation extends loses after forming the thing which is called the death-cross pattern at the beginning of this year. The 10-year bond yield increases to its highest level in one year this week. It is surprising for some experts and market participants.
The steep curves and real levels begins to creep up higher. That becomes the main cause of the gold weakness. That was stated by Ryan McKay. He is an analyst from TD Securities. Furthermore, he also said that there are a few technical aspects to that.
So many people are worried about the death-cross formation. Meanwhile, a senior investor and chief executive officer from DoubleLine Capital LP, Jeffrey Gundlach stated about Bitcoin which has been neutralized for 6 months. It may get the profit from stimulus wave than gold.
The Chance for Gold
An analyst from Goldman Sachs Group Inc said that the yellow metal has a chance to bounce back. He stated in a note on January 27th that the added prospect of stimulus and the interest rate from Federal Reserve which is detained, gold still becomes an interesting investment.
It can’t be denied that the commodity still has charm and always becomes an interesting investment. It is especially for the intermediate up to long-term investment. However, the power of the US dollar in a short-term period will become an obstacle.
The futures for April delivery in Comex New York declined by 0.4% and became $ 1.766.60 per ounce on Thursday. That is the lowest one since 2 of July. They were recovered to stay 0.1% higher. Meanwhile, the bullion spot decrease by 0.1%.
