World gold prices fell sharply, US stocks continued to peak

Gold fell for the 5th consecutive session, to the bottom of 2 months, while the DJIA index closed at a new record.

World gold prices for immediate delivery down nearly 18 USD, closing session 17/2 at 1,776 USD an ounce – the lowest since the end of 11/2020. The reason is that investors bet on the economic recovery, causing the US dollar and US government bond yields to rise.

Movements of world gold prices in recent sessions.

“The US economy is expected to slowly recover,” said David Meger, precious metals trading director at High Ridge Futures. Optimism about the ability to control the pandemic was shown when the dollar rose slightly and the yield on 10-year US government bonds to the highest one-year, Meger said.

Investors’ expectation of a stimulus package of 1.9 trillion USD and accelerating inflation has pulled US bond yields up, thereby bringing the dollar price to a peak of a week compared to other major currencies. Although gold is considered a hedge against inflation, rising yields make precious metals less attractive, by not paying fixed interest.

However, Craig Erlam, an analyst at OANDA, said gold could be in favor again if other currencies rise against the dollar this year.

On the US stock market, the DJIA index set a new high yesterday after a volatile session, thanks to shares of Verizon and Chevron soaring. At the end of the session, DJIA rose 0.3% to 31,613 points.

In contrast, the S&P 500 fell 0.1% to 3,931 points due to the 1% loss of technology stocks. Nasdaq Composite fell 0.6% due to Apple’s 1.8% loss.

Verizon was one of the biggest gainers yesterday, with 5.2%, after the news that Warren Buffett’s Berkshire Hathaway has a large stake in this. Chevron also gained 3% thanks to similar information.

The decline of the S&P 500 narrowed when the US Federal Reserve (Fed) announced the minutes of the last session showing that the agency would continue to loosen when the economy has not approached the pre-pandemic level. The newly released macroeconomic figures also show improvements. Retail sales in January exceeded forecast, with 5.3%. The Producer Price Index (PPI) also increased by 1.3% – the strongest since 2009.

Ha Thu (According to CNBC, Reuters)


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