Jump to content

Gold Down, but Falling Treasury Yields Counter Improved Risk Appetite


Recommended Posts

Gold Down, but Falling Treasury Yields Counter Improved Risk Appetite

investing-new.pngCommoditiesDec 29, 2021 

By Gina Lee

Investing.com – Gold was down on Wednesday morning in Asia, with falling U.S. Treasury yields countering the impact from slightly improved risk sentiment, and giving the yellow metal a boost.

Gold Futures edge down 0.19% to $1,807.45 by 10:41 PM ET (3:41 AM GMT), and benchmark 10-year U.S. Treasury yields edged lower.

Asia Pacific shares were mostly lower on Wednesday, even as concerns over travel disruptions and store closures due to the omicron COVID-19 variant diminished.

For its part, gold continued on a downward trend over increasing evidence that omicron does not pose a major threat to the global economic recovery and investors retreated from the safe-haven asset.

Omicron isn’t “the same disease we were seeing a year ago,” and even patients who do end up in the hospital spend less time there, according to University of Oxford immunologist John Bell, reinforcing reports about the variant’s overall milder nature.

However, daily COVID-19 cases exceeded 1 million for a second consecutive day with the pressure mounting on healthcare systems.

Gold is set for its first annual loss in three years, after hitting an all-time high in 2020, with central banks beginning to withdraw COVID-19 stimulus packages to curb rising inflation. Although the remaining uncertainty over omicron has somewhat boosted demand for safe-haven assets, concerns over the threat to economic activity and reopening are beginning to die down.

With volumes thin on Wednesday, investors expect this trend to continue and a tight range throughout the remaining trading days of 2021.

In other precious metals, silver inched down 0.1%, platinum fell 0.7%, and palladium fell 1.5%.

Link to comment

Gold Prices Cede Ground as Omicron Fails to Charge Breakeven Rates



  • Gold prices extending overnight losses in APAC trading.
  • Omicron lifts breakeven rates but probably not enough.
  • XAU/USD’s Technical posture looks to advantage bears.
Gold Prices Cede Ground as Omicron Fails to Charge Breakeven Rates

Gold prices hit the highest level since November 22 overnight before the yellow metal trimmed gains and shifted lower. A modest rebound in the US Dollar due to a bout of risk aversion on Wall Street likely weighed on prices. A stronger Greenback makes the metal more expensive for foreign buyers, which dissuades overall demand.

Bullion prices are extending losses through Asia-Pacific trading, although selling appears to be marginal. Gold has been trending higher since December 15, when the November swing low was quickly breached. Since then, the psychologically important 1800 level was overtaken while the US Dollar has largely consolidated just below its yearly high when looking at the DXY index.

A rise in inflation expectations, along with the pause in USD strength, has helped gold gain its footing in recent weeks. US breakeven rates – which measure the gap between nominal and inflation-adjusted yields – have risen over the last week, although they remain below levels seen in early December. The 2-year breakeven rate is trading near 3.156% from the December low, which was 3.025%.

The Omicron variant is likely providing inflation expectations a tailwind as some fear widespread lockdowns and tighter social distancing measures may exacerbate ongoing supply chain issues, which could drive up prices. However, with Covid fears starting to subside – despite a significant increase in daily cases across key economies – those inflation expectations may soon lose steam. That would work to gold’s detriment seeing as breakeven rates have failed to close the gap with levels earlier in December.


Gold is back near the 200-day Simple Moving Average (SMA), with the 1800 psychological level in focus as well. A Rising Wedge pattern is also taking shape, opening the door for a potential breakdown below support. If prices manage to avoid that and hold above 1800, it may open the door for gold to test a level just above 1830 that served as major resistance from July To September. MACD and RSI are oriented sharply lower. Overall, it appears the path of least resistance may be to the downside.


gold chart

Chart created with TradingView


Written by Thomas Westwater, Analyst for DailyFX.com. 29th December 2021.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
    • Total Posts
    • Total Members
    • Most Online
      10/06/21 10:53

    Newest Member
    Joined 05/02/23 00:32
  • Posts

    • HI,  Please if any IG supporting staff can answer the questions below? 1. in the upcoming AMC/APE vote on 14 March 2023, can shareholder that hold AMC and APE at IG able to make a vote? I also have AMC and APE at IBKR and they did send out a notification to inform me that I can do proxy vote. Will IG do the same? 2. the upcoming vote is to determine APE covert back to AMC then do reverse spilt. Last year after APE issued, IG staff told me that they have to move APE to share dealing account from my ISA account as ISA is not eligible to hold APE (which is completely unbelivable, my APE at AJ Bell and HL are still sitting in ISA account). Anyway, if the conversion and reverse spilt is going to happen, will IG move my APE back to ISA account for the corporate action? Many Thanks
    • The epidemic in recent years has produced profound changes in people's lifestyles, and many of their activities have started to be developed in the virtual world, which plays an important role in promoting the development of the universe of meta. Games, as an important part of the universe of meta, will be the first industry to gain the benefits , but the following conditions are still indispensable for blockchain games to achieve better development.   - Wallets and Exchanges. Through the use of wallets, game users can truly take control of the assets in the game, and exchanges provide a trading platform and liquidity for these game assets NFT, helping users trade and revitalize their game assets. Wallets are a key application for depositing blockchain assets. Currently, wallets such as Metamask are not enough to support the extensive adoption of block games, and wallets will further advance community drive the popularity of blockchain games.  - Game playability. The biggest difference between blockchain games and traditional games is that gamers are also investors. Many blockchain games have gone out of course, treating all users as investors only and forgetting that the essence of making games is to develop high-quality games that users are interested in paying for. If most people play a game just to make money, and no one is ready to pay for it, it becomes a side-scam. The revenue of the participants of the side scam comes from the money of the people who come later, and if there are not enough people who come later, they will not be able to cash in the revenue, leading to the breakdown.  - Speed and performance. A high level of concurrency is the characteristic of game applications, so Wax, Coinan Chain and Polygon, which are public chains with a high level of concurrency and low fees, have attracted a large number of game developers. In the future, with the maturity of technologies such as Ethernet Layer 2 and slice scaling, as well as the maturity of other gaming public chain technologies compatible with EVM, blockchain games will have a better development and operation environment.  - Cross-chain and interaction. Cross-chain and interaction of game assets will be a direction of future development of metaverse games, and blockchain should be connected and accessible like the Internet. The maturity of cross-chain technology in the future will promote the cross-chain transfer of game assets and NFT, and improve the interaction experience of the system                                                                                     The game should maintain the operation of the project by relying on the payment of some users or selling profitable products, just like the new blockchain game Fairy Cat in 2023, which developed diverse gameplay for players and increased the playability of the game, thus got the recognition of many players. Blockchain games need to work hard on game experience and playability. Token economics is essentially just a kind of interest structure , and even good token economics cannot replace the development, operation and profitability of the project itself. It is believed that with the maturity of the above conditions, more and more game developers and investors will enter this industry and together promote the production of some blockchain games with beautiful graphics, first-class experience and high playability.
    • Hello, Is any interest paid on "available" cash (not "margin") in a spread betting account? For example, if I held £10k in an account and had no open positions. The reason for asking is that I understand that proceeds from short sales in a CFD will receive interest (benchmark-2.5%), so was wondering if that applied to all cash, and couldn't find an answer on the web site.   Thanks.
  • Create New...