Gold prices mark the worst start in 30 years

Gold prices mark the worst start in 30 years

The 6.7 per cent decline in spot gold in 2021 is the worst start to a year since 1991, according to data compiled by Bloomberg.

Gold entered 2021 with lofty expectations on the back of a record high and its biggest annual gain in a decade. Instead, the precious metal is off to its worst start in 30 years.

The metal, which surged last year on pandemic-induced haven buying, low interest rates and stimulus spending, has dropped more than 6 per cent in 2021, the worst performance on the Bloomberg Commodity Index. It’s suddenly facing a host of unexpected stumbling blocks.

With “rates going higher and inflation expectations peaking out, we’re seeing a lot of profit-taking in gold and people are going from gold into industrial metals such as copper,” said Peter Thomas, senior vice-president at Zaner Group in Chicago. “It’s a perfect storm.”

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The 6.7 per cent decline in spot gold in 2021 is the worst start to a year since 1991, according to data compiled by Bloomberg. A gain in 10-year Treasury yields is weighing on demand for non-interest-bearing bullion, with the metal extending losses after forming a so-called ‘death-cross pattern’ earlier this week. Yields on 10-year Treasuries climbed to the highest levels in about a year this week.

Gold could still mount a comeback. Goldman Sachs Group Inc. analysts led by Jeffrey Currie said in a note that with prospects for additional stimulus and Federal Reserve interest rates on hold, the metal “remains a compelling investment for the medium-to long-term investor.” That’s even as near-term dollar strength could present a hurdle, the bank said.

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