- XAU/USD has started to consolidate as the markets pause for a breath.
- Gold holds in the lower end of the recent sell-off with stocks in decline.
Gold is currently trading at $1,774 and virtually flat on the session having moved with a relatively tight range between $1,768.59 and $1,789.63.
There has been a pause in volatility on Thursday as the greenback and US yields take a breather in their advance this week.
With stocks also in retreat as well, the precious metals have been thrown a lifeline. The MSCI’s global stock index IACWI was down 0.79% at 677.28. The index touched a record intra-day high of 687.26 on Tuesday, before erasing gains to snap an 11-day winning streak.
Investors’ appetite for riskier assets dulled after data showed the number of Americans filing first-time applications for unemployment benefits unexpectedly rose last week even though the labor market is steadily recovering as additional fiscal stimulus and falling COVID-19 cases allow more service businesses to reopen.
Initial jobless claims rose to 861,000 in the week ended Feb. 13 from 848,000 the previous week and compared with an expected decline to 773,000, as per data com by Bloomberg. The four-week moving average, however, fell by 3,500 to 833,250, according to the US Department of Labor.
Meanwhile, following the same-old-message from the FOMC minutes, the yield curve continues to steepen as the status-quo trading context prevails, analysts at TD Securities explained.
”Yet, after a multi-month lull, real rates are now headed in the direction that could threaten risk assets. Such is the nature of the balancing act being played by the Fed. The central bank is testing rates market, which could in turn test sky-high market valuations, which could ultimately test the Fed’s resolve to maintaining a reactive rather than proactive approach.”
”In this sense,” the analysts said, ”we suspect pressure will build at the Fed to push back against taper talk, but in the meantime the rise in real yields has lowered the bar for gold prices to break below their months-long support. With gold positioning still crowded, the hurdle for a shakeout in gold is razor thin. CTAs are marginally adding to their silver length and meaningfully adding to their palladium length.”
