In the wake of a turbulent week on Wall Street, investors sought refuge in Treasury bonds and the U.S. dollar, with gold prices ending the week higher than in the previous month. However, gold futures finished flat on Friday as investors shifted to Treasuries and the U.S. dollar.

For June delivery, gold is available. After climbing 1.4% on Thursday, the most significant daily percentage rise since April 12, GC00 closed at $1,842.10, a 0.1% higher. Dow Jones Market Data shows gold up 1.7% for the week, ending its worst losing run since August 17, 2018. CME’s silver lost 23 cents or 1.1%. 

According to Dow Jones Market Data, this was the highest weekly rise since April 14, released on Friday. Treasurys have surged this week, driving rates down and increasing demand for safe-haven assets, in reaction to a steep plunge in stocks last week on the verge of a bear market.

Since last week, the yield on the 10-year note has fallen from 3.2 percent to 2.79 percent. Of course, it’s not certain how long the low bond rates will stay, but gold benefits from them. 

With interest rates expected to rise in the U.S. shortly, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, believes gold’s recent rally may be short-lived.

BofA Global Research said that as part of its battle against inflation, the Federal Reserve will boost interest rates. According to the firm, higher interest rates will result in higher yields. As a result, BofA Global Research recorded a large $1.4 billion withdrawal from gold funds last week, as investors fled stocks in one of their most brutal weeks ever.

Another reason investors are selling everything they own is to fulfill margin calls or redemptions, as seen by the report’s mention of a “sell everything” mentality. People who have migrated down the liquidity curve to long-term “hard to liquidate” assets discover that gold is becoming ever more crucial as demand for income develops.

Commodities traded in other currencies may become more costly if the dollar gains strength, negatively influencing their prices. According to Ozkardeskaya, the $1,837 an ounce reaches resistance at the 200-day moving average, which “coincides with the corrective band top.” If gold breaks over the 200-day moving average, we might see a continuation of the run into $1880 to $1900 an ounce. Since the Fed would not be able to eliminate inflation quickly, “I retain my pessimistic perspective on gold in the long term,” she added. We might see the Russian shock on gold supplies influencing the swing in favor of gold.

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