Gold News

Gold and Silver Retreat from 6-Week Highs as Euro Bond Yields Hit 7-Year Records

GOLD and SILVER BULLION prices retreated from yesterday's 6-week highs on Tuesday as London's physical market returned from the long Easter weekend, the US Dollar rose to its strongest on the currency markets since the Covid Crisis of March 2020, and longer-term European interest rates hit their highest in almost 7 years.
 
With Russia intensifying its assault on eastern Ukraine's Donbas region as the French finance minister claimed the European Union is preparing to ban imports of Russian crude oil, that pushed the Dollar price of large wholesale gold bars settled in the world's storage and trading hub back to $1967 per ounce, down by $30 from Monday's peak.
 
Global stock markets meantime dropped yet again after Friday and Monday's European shutdowns saw the MSCI World Index lose value once more, slipping to a new 1-month low overnight while commodity prices retreated and longer-term interest rates rose to fresh multi-year highs in the bond market.
 
With inflation across the developed Western world hitting 3- and 4-decade highs, the UK government's 10-year borrowing costs neared 2.0% per annum today as Prime Minister Boris Johnson faced demands in Parliament to resign over breaking his own Covid lockdown laws and lying about it.
 
Germany's 10-year Bund yield – which was below zero as recently as early March – meantime rose to its highest since 2015, peaking above 0.9% per annum, as new Chancellor Olaf Scholz faced yet more criticism over being "too hesitant" in imposing sanctions against Moscow and reducing imports of Russian oil and gas.
 
Chart of Germany's 10-year Bund yield. Source: Trading Economics
 
With France's benchmark government bond yield also at the highest in 7 years, "I hope that in the weeks to come we will convince our European partners to stop importing Russian oil," said France's Bruno Le Maire today, claiming that the push is being led by President Macron – now facing anti-Nato and anti-EU challenger Marine Le Pen in next weekend's second-round ballot.
 
Gold was firmer but also slipped in other major currencies as the Dollar rose, dropping below £1515 in UK Pounds, retreating to €1820 in Euros but setting yet another fresh all-time record in Yen – touching almost ¥8,175 per gram – as the Japanese currency fell to a new 2-decade low on the FX market.
 
Silver also retreated against the rising Dollar but by less than gold, slipping 0.9% from its Easter Monday high after breaking above $26 per ounce for the first time since 11 March.
 
China's stock market had earlier led Tuesday's global equities losses, cutting 0.8% off the CSI 300 index and 2.3% off the Hang Seng despite the People's Bank unveiling 23 measures to try easing credit conditions in the world's 2nd largest economy.
 
The moves "echoed a similar list of policies released in February 2020, at the height of the initial Covid outbreak," says Bloomberg.
 
With Covid lockdowns now shuttering major cities, manufacturing zones and ports, the CSI 300 index has lost almost 30% from February 2021's record high.
 

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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