International spot gold on Tuesday (February 23) intraday volatility, as high as $1,816.36 / ounce gains after pared-down, temporarily remained flat, showing the current market mood is nervous, investors are still cautious. Stocks took some hits during the day, with the Nasdaq down more than 2 percent at one point and many technology stocks pulling back sharply, which boosted risk aversion in the market, but comments from Fed Chairman Colin Powell quickly boosted risk sentiment. But the pullback in Treasury yields ultimately helped gold trade in a tight range.
Despite the sharp rise in Treasury yields and rising inflation fears this year, price pressures remain largely subdued and the economic outlook remains “highly uncertain,” Powell said. “The economy has a long way to go from our employment and inflation goals, and it is likely to take some time before we make further substantial progress,” he said in prepared remarks to the Senate Finance Committee. Powell
He added that the Fed is “committed to using all of our tools to support the economy and to help ensure that the recovery from this difficult period is as strong as possible.” However, the speech did not address the market’s most pressing concern, the surge in long-term Treasury yields in 2021 to their highest level since the outbreak of a new pandemic.
But as Treasury yields spiked in the short term, some investors started buying Treasuries in a panic, which temporarily pulled yields back down and helped stabilize the market.
On the fiscal stimulus front, the House Budget Committee on Monday approved a $1.92 trillion bill to implement Mr. Biden’s new bailout plan. It’s the first step toward passage of the bill in the House this week. While the final rescue package could be scaled back, analysts expect it to end up not far behind the $1.9 trillion proposal previously put forward.
On the other hand, the price of Bitcoin continued its downward trend, falling below $45,000 at one point in the day. In addition to the impact of Musk’s tweets, the critical remarks of U.S. Treasury Secretary Janet Yellen were also important factors. Yellen noted on Monday that Bitcoin is not a widely used trading tool, that its investments are “highly speculative,” and that there are important concerns about its legitimacy and stability that could expose investors to losses.
Technically, the daily chart shows that gold prices have rebounded for two consecutive days since 1960 and are currently retreating around the 20-day moving average of 1820. If the short-term further pullback, focus below the 1790-1800 area support, a breach of this support area may open up the space to fall back to 1760.
If the recovery rebound rise, attention can break 1820, once the effective breakthrough may open up to 1850 space.
TD Securities notes that a number of long positions were stopped after gold fell to $1,790 an ounce last week. “Investors continue to sell long positions and short positions are increasing as the key trend for gold has changed, the Treasury yield curve has steepened and real interest rates are moving higher.”
Gold “has been well supported throughout the outbreak as investors have sought safety,” ANZ analysts wrote in a note. But that trend is reversing as interest rates start to rise and investors rediscover their appetite for bonds. However, if inflation surges, buying interest in fixed assets will be affected.”