The impetus for near term weakness in gold comes from various factors such as increased optimism about economic recovery, some reduction in political risk in the US, but most importantly from a jump in 10-year US bond yields, CPM consultancy said in a Trade Signal note.
CPM Group stipulated Sell with a target price/range of $1,675 per ounce in the March 5-12, 2021, period.
“While on a longer term basis bond yields are still very low, they have risen quickly and sharply in recent weeks,” the US consultancy said.
“Additionally, the Fed (US central bank) does not plan to control the increase in longer dated rates at this time. While markets expected yields to rise over the course of 2021 and possibly approach 1.5% later in 2021, the gains have been stronger and arrived sooner than the market had expected.”
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