Gold on Wednesday traded below $1,900 an ounce, a psychologically important round number, as positive momentum for stocks and a strengthening dollar undercut appetite for bullion, risking a further break in a bullish trend line in the precious commodity.
“A rallying U.S. dollar index recently and a rebound in global stock markets at midweek are bearish elements for the precious metals markets,” wrote Jim Wyckoff, senior analyst at Kitco.com.
“Silver has seen its near-term price uptrend...negated this week and gold is in serious danger of seeing its near-term uptrend ending,” the Kitco analyst wrote.
December gold traded $21.40, or 1.1%, lower at $1,886.40, deepening its march to its late-July lows after the metal skidded 0.2% on Tuesday.
Meanwhile, December silver tumbled 98 cents, or 4.1%, to trade at $23.53 an ounce, following a 0.6% gain on Tuesday.
Precious-metal prices have been under selling pressure since the start of the week as rising cases of COVID-19 in Europe and in the U.S., helped to fuel an unwind of profitable bets on gold and silver, and into dollars—a shift that further weighed on gold buying.
The U.S. dollar was up 0.1% on Wednesday, looking at a weekly gain of 1.3%, as measured by the ICE U.S. Dollar Index, a measure of the buck against a half-dozen currencies.
Experts said that comments from Chicago Federal Reserve President Charles Evans, who implied in the a speech that the Fed could lift benchmark interest rates, which currently stand at a range between 0% and 0.25%, sooner than the market expects.
“We could start raising rates before we start averaging 2%, we need to discuss that,” he added, during a discussion sponsored by OMFIF, an international forum for economic policy, on Tuesday.
A number of other Fed speakers are expected on Wednesday, including Chairman Jerome Powell, who will appear before the House Select Subcommittee on the Coronavirus Crisis at 10 a.m. Eastern after providing Congressional testimony on Tuesday.
Global stocks were rising on Wednesday but equities have choppy, with the S&P 500 on Monday narrowly avoiding a close in correction territory—defined as a retreat of 10% from a recent high.
“Gold and silver bulls are confounded this week,” Wyckoff said. “Their markets sold off, along with the global stock markets, on Monday, but then also see selling pressure at mid-week when the world stock indexes are rebounding.”
“It appears the safe-haven metals need a new fundamental spark to jumpstart upside price action. Don’t be surprised if such occurs sooner rather than later,” the analyst said.