The bond market has trouble buying Fed speak that U.S. rates will not go up anytime soon. And gold is paying again for that anxiety. Gold for February delivery on New York’s Comex settled Thursday’s official session at $1,851.40 an ounce, down $3.50, or 0.2% despite Federal Reserve Chair Jay Powell saying the time for a rate hike is “no time soon” and that any increase will have to be on the back of meaningful economic recovery. The benchmark gold futures contract actually shot up as high as $1,857.30 as Powell said that — before clambering lower on bond and forex traders’ notions that they knew better about the state of the U.S. economy than the head of the country’s central bank. Bond yields for the benchmark U.S. 10-year note, meanwhile, flipped to the positive for the first time in three sessions, rising 3.3% to show a reading of 1.124 by that time. The Dollar Index — the alternative trade to gold — fell as Powell ruled out an immediate rate hike, helping the yellow metal’s initial rally. While the greenback came off its lows later, it remained in negative territory. Yet, that did not help prop gold higher. Surging bond yields have wreaked havoc on gold prices since last week, triggering a meltdown of more than $100, or 4%, from highs above $1,960 attained by the yellow metal at the start of the year. The trend persisted on Thursday on ideas that the U.S. economy will somehow, miraculously, fix itself in the next few months from the coronavirus pandemic and pressure the Fed to hike rates — despite a coterie of Fed officials, with Powell being the latest — to deny that since Tuesday.

Source: Investing.com