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Metals Stocks: Gold breaks above key ‘resistance’ price at $1,900, turns positive for 2021

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Gold futures on Wednesday traded above a price that had been viewed as a point of resistance for bullion for weeks, and turned positive for the year to date, perhaps pointing to a near-term bullish outlook for the precious metal, according to traders.

June gold
GCM21,
+0.26%

 
GC00,
+0.26%

was $5.90, or 0.3%, higher at $1,903.90 an ounce, after a 0.7% gain on Tuesday, a move that extended a move for the most-active contract to the highest settlement since Jan. 7. August gold
GCQ21,
+0.26%
,
which is also among the most active, traded at $1,906.40 an ounce, up $5.90, or 0.3%.

Prices moved above the key level of $1,900 in electronic trading late Tuesday, a level it hasn’t settled at since early January.

Read: Why gold is headed for the largest monthly gain since July

“Gold approaching $2,000 is not surprising,” Collin Plume, founder and chief executive officer of Noble Gold, told MarketWatch.

“It’s a correction because gold has…been undervalued for decades now,” he said, as the world has a limited supply of the precious metal and can’t producer more. “It is a lot more valuable than the price we are paying for it.”

It would take an “astronomical event to produce more gold,” said Plume.

Weakness in the U.S. dollar
DXY,
+0.43%
,
particularly against China’s yuan
CNYUSD,
+0.30%

which is at its highest in about three years, and a retreat in Treasury yields, with the 10-year Treasury note at around 1.56%, have buttressed gold moves.

Falling yields can benefit precious metals and other commodities, which don’t offer a coupon, by reducing the opportunity cost of holding them against yield-bearing assets. And dollar weakness can make assets priced in the currency more attractive to overseas investors.

Commodity analysts have made the case that talk from a number of Federal Reserve officials, who have expressed tolerance in the short-term for rising inflation as the economy recovers from the COVID-19 pandemic, has helped to buoy bullion.

“Gold continues its fine form due to ongoing weakness in US dollar and bond yields—thanks mainly to a dovish Federal Reserve, still insistent on keeping emergency stimulus measures running at full throttle,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a daily note.

Gold is headed for a monthly gain of nearly 8% and its recent rise has helped it flip into positive territory in 2021. Bullion’s current gains put it on track for its best monthly climb since July, FactSet data show.

Among other metals, July silver
SIN21,
-0.43%

edged down by 0.4% to $27.94 an ounce, after tacking on 0.5% Tuesday.

July copper
HGN21,
+0.50%

rose 0.5% to $4.53 a pound. July platinum
PLM21,
+0.12%

climbed 0.3% to $1,200.60 an ounce, but September palladium
PAU21,
-1.29%

fell 1.2% to $2,751.50 an ounce.

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