All 3 sentiments exisit for gold- bearish bulish and neutral

 Gold prices continued to stay under pressure and recently reached at $1679, the lowest level since early June, affecting the gold dealers in India. It then bounced modestly to the upside but remained under pressure about to pots the eight daily losses out of the last ten trading days.

In an environment of rising U.S. yields, growth recovery, vaccine rollouts, and investors getting more optimistic on growth prospects; hence demand for safe havens is expected to struggle.

Gold slumped last week, hurt by the rising Treasury yield environment. The rising Treasury yield, driven by strong economic data and an appetite for taking on risk, has sent the demand for gold falling continuously.

Higher US yields and a stronger greenback continues to be the key factor keeping gold on a negative bias. Not even risk appetite in the US has helped the yellow metal. 

U.S. 10-year Treasury yields edged lower, raising the appeal of holding gold. A steady rise in bond yields makes holding gold less attractive as investors typically tend to gravitate toward assets that generate steady income in the form of interest or dividend.

It was a combination of U.S. dollar strength and market participants bidding the precious yellow metal lower that resulted in gold’s considerable decline

Two sessions and DOW gained nearly +1000 points on US Covid package but the NASDAQ slipped by 3% and most bond yields did not show huge positive traction. 

Gold stayed below $1700 since Mondays opening and testing crucial support bands of $1680-1685. As said this and around $1678, all are significant support bands and on a pull back before Wednesdays’ report- CPI, Block buster data. It can be $1705-$1715 again. 

Gold ETF holdings have now fallen three months in the last four and this trend is set to continue if yields continue inching higher.

On Monday, the yellow metal dropped to the fresh low since June 2020 amid the US dollar rally and strong Treasury yields defying commodity bulls. However, the bears seem to have stopped for a breather while waiting for the US House session on Tuesday.

The price of gold coins in Mumbai rose on Tuesday, as a pullback in U.S. Treasury yields added some lustre to the metal after it hit a nine-month low in the previous session.

Spot gold rose 0.7% to $1,692.21 per ounce during early trading hours in Tuesday. Prices had fallen more than 1% on Monday to $1,676.10, their lowest since June 5.

Gold picked up bids near $1,683, up 0.20% intraday, during early Tuesday. The yellow metal recently benefited from the recent halt in bond rout while also ignoring the US dollar’s sustained rally.

Rising bond yields have taken a significant bite out of the gold dealers in India this year, but investors shouldn't fear increasing nominal yields as real interest rates will remain negative for the foreseeable future.

We continue to remain optimistic on gold coins as the price is supported by long-term fundamentals, including rising debt levels and extremely accommodative monetary policy.

Additionally, issues concerning the vaccinations and economic recovery should also be observed as fears of the coronavirus (COVID-19) variants battle unlock efforts in the West.

Markets may have turned bearish for gold in the short term and neutral in the long term, we still see gold as investors favourite. 

Uncertainity Prevails

 Gold prices began rallying in 2019 and reached an all-time high of US$2,000 an ounce in mid-2020. Since then, the yellow metal has consolidated around US$1,800 an ounce.  Before the consolidation, gold was declared as one the best performing assets of 2020. It surpassed the S&P 500, global treasuries, international and emerging market stocks, as well as commodities and oil.

Gold began the year with disdainful expectations on the back of a record high and its biggest annual gain in a decade. Instead, the precious metal is off to its worst start in 30 years.

Gold had a strong start to the year, moving to its monthly high of $1,959 per ounce on 6 January at the same time the U.S. dollar index (DXY)1 made fresh three-year lows. However, gold quickly reversed course as it became clear the democrats had won a runoff election in Georgia, which, with the help of a democratic vice president, gave them control of the Senate. With this crucial victory, the markets quickly embarked on a “reflation trade”, betting that the democrats would pass trillions of dollars of additional spending on pandemic relief, infrastructure and green initiatives. Interest rates spiked higher, taking ten-year treasuries to a ten-month high of 1.18% on 12 January. The rise in rates bolstered the U.S. dollar, driving the DXY to its monthly high on 18 January, while gold fell to its monthly low of $1,804.

February witnessed similar behaviour for the yellow metal. Spot prices touched a seven-month low on Friday, extending a fall and penetrating through a support level that analysts say could signify further losses. 

Gold gained in 2020 mainly over the following-

• pandemic-induced haven buying
• low interest rates 
• stimulus spending

However, this year gold is suddenly facing a series of unexpected and uncertain hindrances. Mainly-

• resilience in the dollar 
• a rally in U.S. Treasury yields 
• Global  economic recovery from the pandemic 

With rates going higher and inflation expectations peeking out, we’re seeing a lot of profit-taking in gold and people are going from gold into other investment options confirms analysts from RSBL.

However, RiddiSiddhi Bullions Limited is confidents and still believe prospects for rsbl gold coins and bullions to make a comeback, betting that the inability of governments and central banks to normalize stimulus policy will see it climb again. Currently the Federal Reserve has kept additional stimulus and interest rates on hold.  So, some analysts still believe that the metal continues to remain an investors favourite for the time being. 

The outlook for gold is challenging as yields rise and a general risk-on tone across markets impacts safe haven demand. The surprising resilience of the USD is at the core of this drop in investor appetite, and profit taking has emerged following gold’s strong start to the year. 

While gold is seen as an inflation hedge, higher inflation expectations have pushed yields up, increasing the opportunity cost of holding non-yielding bullion.

Gold should still benefit from continued loose monetary policy and low real interest rates this year. 

The recent rise in yields suggests that some investors are starting to anticipate a tightening of policy sooner than anticipated to accommodate a potential rise in inflation.

There is a cycle that finds correlation between a series of events. Let’s have a look. With central bank support removed, bonds usually fall in price which sends yields higher. This can also spill over into stock markets as higher interest rates means more debt servicing for firms, causing traders to reassess the investing environment.

As we know that uncertainties are bound to continue in the economic environment, we would not advice reducing your gold exposure. In fact, any form of uncertainty promotes bullish sentiment thus compelling investors to own gold and add resilience to their portfolio.