Gold drifts higher in quiet mid-week trading

(USAGOLD –1/13/2021) – Gold drifted higher in quiet mid-week trading, with the $1850 looking like the support level – at least for now. It is up $3 at $1860. Silver is down 12¢ at $25.52. Generally speaking, the markets are in the quiet mode this morning, with nothing standing out save the latest chapter in the unfolding saga in Washington. Of late, the financial world has had its eye on rising longer-term bond yields. “[I]nvestors searching for an explanation [for gold’s recent plunge],” writes Gold Newsletter‘s Brien Lundin in a client advisory e-mailed yesterday, “need to remember one basic fact: The bond market drives everything.” Rising yields and weakness in the gold market have created something of a deja vu harkening back to last March’s “Great Liquidity Crisis.” (Please see “The bubble either inflates or bursts…”(1/12/2021) Gold sold off early in that crisis then surged as concern about the widespread systemic risks and the effect on the dollar became apparent. On the other hand, the dollar went into a steep retreat, as shown in this morning’s Chart of the Day. As you can see, the two took separate paths beginning early in 2020 – a process that accelerated as the year progressed.

Chart of the Day

overlay chart showing the US Dollar Index and gold divergence in 2020

Sources:  St. Louis Federal Reserve [FRED], Federal Reserve Board of Governors, ICE Benchmark Administration
Click to enlarge

 

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