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

June gold
GCM21,
+0.31%

 
GC00,
+0.31%

was $14.70, or 0.8%, higher at $1,912.70 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.

Weakness in the U.S. dollar
DXY,
+0.29%
,
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 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.

Market Snapshot: U.S. stock futures edge higher with inflation worries in check and bond yields slipping

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