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  • Metals recovery from multi-month lows on Wednesday, ending negative streak.
  • XAU/USD rises toward $1710, next resistance above at $1720.

Gold and silver are rising more than 1% on Wednesday, recovering after posting sharp losses during two consecutive days. A modest decline in US yields, a correction of the US dollar, month-end flow, and some profit-taking favored the rebound.

XAU/USD rose further above $1700/oz and peaked at $1709, still below Tuesday’s top. The recovery takes place after the yellow metal found support again around the $1675 during the Asian session.

The rebound so far is seen as a correction as the main trend in gold continues to point lower. The price continues to be strongly correlated with US real yields. However, on Wednesday the rally in XAU/USD took place amid a modest retreat in yields, probably amid some downside exhaustion in gold and amid a correction of the US dollar.

Analysts at Capital Economics consider the real Treasury curve will continue to steepen. “We expect this to heap more pressure on the price of gold, which we doubt will get any offsetting boost from a flight-to-safety given our view that the US stock market will stay strong this year.  Our end-2021 forecast for the price of the metal is $1600/oz.”

Technical levels