With just one day left in the month, quarter and financial year (for Australia), Gold is heading for its worst monthly performance since November 2016, when the price dropped more than 8%. In June 2013, gold dropped 11%. So far in June 2021 it has fallen 7.6%.
Tuesday saw prices slide in another repeat of the weakness seen earlier in the month.
Driving the concern is a firming US Dollar off the back of the surge in new Covid cases in more and more major economies. The lockdowns across Australia with 12 million people restricted garnered considerable publicity Tuesday in market reports.
The US dollar index was last trading at 92.03, up 0.20% on the day, while the 10-year Treasury yield was at 1.47%, down from the previous day and last Friday.
The Aussie dollar was just over 75.12 US cents and looking weak
Comex gold futures in New York were down 1.3% to $US1,750 an ounce in New York just after 7am Sydney time Wednesday.
Gold slipped below $US1,800 an ounce earlier this month, with traders now turning their focus on the timing of when central banks may start easing stimulus.
But the upsurge in new infections of the Delta strain of Covid is starting to see more and more analysts pushing back the timing of any tightening of monetary policy in the US and other economies. Even in the US more and more of the new infections are the Delta strain of the virus.
“A stronger dollar and rising interest rates on the day are seeing gold continue to bleed lower. Gold is in need of a catalyst to re-energize the market, as the lack of impetus to buy the yellow metal in the aftermath of the FOMC continues to suggest the bar is low for continued weakness,” according to strategists at TD Securities.
According to Karen Jones, team head of FICC technical analysis research at Commerzbank now is a good time for the dollar because the U.S. is seen as the best place to be during the pandemic due to its quick vaccine rollout.
“The U.S. is now the best place to be during the pandemic due to its fast and expansive vaccine rollout stemming what was once the world’s worst outbreak,” Jones wrote.
“Fear that the new mutation of the COVID virus will slow the global recovery has sent ripples across the global capital markets. The foreign exchange market has the clearest reaction, and the dollar is bid,” noted Bannockburn Global Forex chief market strategist Marc Chandler, according to a report on the Kitco website.
All financial markets are now focused on Friday’s June jobs and employment report. Market consensus sees 700,000 jobs added vs. 559,000 in May, with the unemployment rate expected to fall improve to 5.7%.
