(Kitco News) The first week of March was a damaging one for gold as prices broke through the psychological level of $1,700. Now, the key question on everyone’s minds is just how much lower can gold drop before bottoming out?
Down more than $200 since the start of the year, gold investors are looking for the magical line in the sand that will signal the end of the downtrend. At the time of writing, April Comex gold futures were trading at $1,699.10, down 2.8% on the week.
The main culprit has been the rising U.S. 10-year Treasury yield, which has triggered a stronger U.S. dollar that is weighing on gold. And this week’s Federal Reserve Chair Jerome Powell’s message that largely ignored inflation concerns and rising yields did not help.
“Powell’s failure to push back on the recent rise in bond yields took away the luster of holding gold. It has provided a short-term bullish outlook for the dollar, which is weighing on gold.
We are going to have a week and a half of no comments from the Fed, which is their blackout period until the next monetary policy meeting on March 17,” OANDA senior market analyst Edward Moya told Kitco News.
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