Gold and silver retreat as dollar gains upper hand

February 4, 2021

New York (Feb 4) - Gold and silver slipped on Thursday as the

dollar and U.S. Treasury yields gained and markets awaited

clarity on U.S. fiscal stimulus measures.

Spot gold dropped 0.9% to $1,818.00 an ounce by 1307

GMT after touching a two-month low. U.S. gold futures      

fell 1% to $1,817.20.

Silver, meanwhile, slipped 1.2% to $26.54.

"This flight into silver by some retail investors has been

an excessive move to the upside, which is now corrected to

normal fundamental-supported levels,"  said Quantitative

Commodity Research analyst Peter Fertig.

Silver prices have declined more than 12% since a

GameStop-style retail frenzy sent them to their highest in

nearly eight years at $30.03 on Monday.            

Gold is also under pressure from the technical side," said

Commerzbank analyst Daniel Briesemann. "It dropped below the

200-day moving average, which triggered technical follow-up

selling. If it goes below the $1,800 mark ... we might see gold

lower in the short-term."

U.S. yields and a firmer dollar also pressured precious

metals.Making bullion more expensive for those holding other

currencies, the dollar scaled a two-month peak, while

U.S. 10-year Treasury yields were at a more than three-week


Gold is considered a hedge against inflation from large

stimulus measures, but higher yields challenge that status

because they increase the opportunity cost of holding

non-yielding bullion.

    Investors also focused on a $1.9 trillion U.S. coronavirus

aid plan passed by the U.S. House without Republican support.


    "The biggest risk to gold is stronger recovery as vaccines

roll out, to the extent that we see U.S. bond yields rally,"

said Lachlan Shaw, National Australia Bank's head of commodity


    However prices could remain supported if the rollout faces

uncertainty because of emerging virus variants, he added.

    In other precious metals, platinum        fell 1.3% to

$1,087.22 an ounce and palladium        lost 0.3% to $2,267.99.


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