Gold Mining Stocks Retreat On Strong Dollar & Rising Treasury Yields

September 17, 2021

New York (Sept 17) Gold mining stocks are trying to settle below the lows that were reached in late February while gold is testing the support level at $1750. Gold mining stocks have also made an attempt to settle below these levels in late July but failed to develop sufficient downside momentum.

Stronger dollar and rising Treasury yields have served as main bearish catalysts for gold mining stocks. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is currently trying to settle above the resistance at 93.10 which is not far away from yearly highs at 93.56.

Meanwhile, the yield of 10-year Treasuries is testing the resistance at 1.38% which served as a major obstacle on the way up in August and September.

What’s Next For Gold Mining Stocks?

This is an important moment for gold mining stocks like BarrickNewmont or Kinross as the sector is trying to settle below the important support level. In case this attempt is successful, gold mining stocks may gain significant downside momentum.

Rising Treasury yields may present a big problem for the gold market. Gold pays no interest while its safe-haven status has not provided much support in recent months as traders focused on the upcoming reduction of Fed’s asset purchase program.

At this point, the setup is bearish for gold mining stocks as Treasury yields and U.S. dollar are moving higher. However, the situation may change quickly in case the Fed is more dovish than expected. In this scenario, gold will move higher while traders will rush to buy gold mining stocks near yearly lows.

All in all, traders should be prepared for increased volatility in the upcoming trading sessions as the market will likely remain nervous until the Fed announces its Interest Rate Decision and provides commentary on September 22.


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