Gold off marginally on FOMC concerns, sharp sell-off in the bond market
Goldman says oil demand will jump like never before; copper will hit new records

(USAGOLD – 4/28/2021) – Gold dropped marginally in trading on concerns about today’s wind-up of the FOMC meeting. The sharp drop in yields that began on Monday serves as a reminder of just how precarious conditions are in the bond market and precisely why the Fed is likely to tread very carefully when it presents the results of its meeting this afternoon. Gold is down $2 at $1776. Silver is down 25¢ at $26.08. Both are recovering from lows hit earlier in the session. According to a Bloomberg report this morning, Goldman Sachs believes “commodities will stay hot…after a rally that’s been a standout of global markets. The firm sees oil demand jumping like never before and copper hitting new records in the next six months. Raw materials will advance 13.5%, with Brent set to hit $80 a barrel. UBS agrees, expecting a further 10% rally driven by energy and materials.” Silver is likely to be a more direct beneficiary than gold if the rally continues given its industrial uses, including in Biden-favored green technologies. However, gold could get a boost if investors see it as lagging the commodity complex and due for a rally.

Chart of the Day

The Goldman Sachs Commodity Index and Gold
(Percent gain or loss year to date, 2021)

overlay line chart showing the GSCI and gold year to date

Chart courtesy of TradingView.com • • • Click to enlarge

Chart note: When you consider that Goldman’s commodities index is up almost 22% since the beginning of the year, it gives cause to think that gold might be lagging and due for a rally. It is down almost 7% on the year. (Chart date: 4/21/2021)

 

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