Gold slumps to 20-day lows near $1290 on broad USD strength

  • US T-bond yields extend recovery in the early NA session.
  • US Dollar Index climbs to highest level in more than two weeks above 97.
  • Wall Street starts the day in the positive territory.

The XAU/USD pair came under a renewed selling pressure in the last hour and broke below the critical $1300 mark to touch its lowest level since March 8 at $1291. As of writing, the pair was trading at $1291.50, losing more than $18, or 1.4%, on the day.

The decisive recovery seen in the U.S. Treasury bond yields on Thursday points out to improved market sentiment, which weighs on the traditional safe-havens such as the precious metal. Following yet another drop to a fresh 16-month low earlier in the day, the 10-year T-bond yield gained traction after the GDP data from the U.S. and was last seen adding more than 1% on the day. Moreover, major equity indexes in the U.S. started the day in the positive territory to confirm the risk-positive environment. 

In its third estimate today, the U.S. Bureau of Economic Analysis reported that the real GDP in the fourth quarter expanded by 1.9% on a quarterly basis, beating the market expectation of 1.8%. At the moment, the US Dolla Index is at its highest level in more than two weeks at 97.26, gaining 0.32% on the day.

Assessing the data, “Taking a step back it is clear that the US economy continues to perform very well both in absolute terms and relative to key developed market economies,” ING analysts said.

“Output is now 20% above its 2008 pre-crisis peak with the economy having grown 24% since its 2009 trough, whereas the UK and Germany are eight percentage points behind and Italy is in a completely different race.”

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