Gold price ended the trading session for the week on a bearish note.

This was its worst week since March, as U.S. Treasury yields surge and delay of the stimulus package from U.S congress dented the bullion metal’s upside.

Gold futures settled lost 0.85% to trade at $1,953.60.

Gold prices lost about 4.5% in value this week after hitting a record peak of $2,072.50 on August 7.

Higher U.S yields increase the opportunity cost of holding non-yielding assets such as gold, which has gained over 28% so far in 2020.

Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics spoke on the macros affecting the yellow metal’s price. He said;

“And fortunately for gold investors, they have friends at the Fed as speakers unanimously reside incredibly cautious about the US economic recovery.

“It has been a tumultuous week for the gold price, which is back to $1950 levels, having clawed back a good chunk of this week’s losses. The US dollar remains under pressure as investors are growing more skeptical of Congress’s willingness to pass a stimulus package.

Still, it could be a challenge for gold markets to regain last week’s fame as more fixed income traders are willing to short bonds now, which complicates the bullish gold view.”

Brent Crude oil prices dropped slightly at Asia’s trading session.

Brent crude prices held most of it gains from the previous trading session after U.S. government data showed a fall in U.S Crude Stockpiles supporting the view that fuel demand is picking up despite the COVID-19 pandemic.

Brent crude was slightly down by 0.07% to trade at $45.40 a barrel by 04.32 GMT, after a gain of around 2% in the previous session.

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Quick fact: Brent crude is the leading global benchmark for Atlantic basin crude oil. The international benchmark is used to set the price of crude oil of about two-thirds of the world’s traded crude oil including Nigeria’s crude.

However, Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics, revealed vital macros, that could keep crude oil relatively stable in the coming days. He said;

“But even worries around stalled US fiscal talks are partly offset by the US administration’s conciliatory tone on China’s compliance with the ‘Phase One’ trade deal.

“The upcoming six-month assessment seems unlikely to prompt any significant fireworks. Also, investor’s optimism remains high on a vaccine cure that is no longer being viewed as a pie in the sky.

“Finally, the US dollar’s weakness helps Oil prices in general, but even more so in this environment, as the weaker US dollar reflects a global “risk-on” environment, not a flagging US economy. “

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Global COVID-19 cases now exceed 20 million, so in the absence of meaningful progress on a COVID-19 vaccine, traders are still looking over their shoulders to where new lockdowns might be necessary.

Gold prices dropped sharply on Wednesday at London’s trading session. Gold futures were down 2.69% to trade at about $1,893.20 as at the time this report was drafted.

The plunge came as appetite for risk assets recovered, thanks to a stronger greenback and real rates. The U.S dollar is up on Wednesday, continuing to rise from its two-year lows.

The present huge sell-offs recorded in the precious metal market astonished many gold traders after the per-ounce price of the yellow metal plunged below $1,900.

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Here’s an Insight: Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained the macros, giving Gold bears such strength, as the precious metal continues its sudden downward trend. He said;

“The real pain trade gold as swollen positions got hit with the truncheon, and gold plunged the most in seven years as the bottom fell out of the markets with US Treasuries and bunds bear-steepening and real yields higher.

“Gold markets sold off picking speed exponentially as freshly minted gold longs ran for the exit.

“And in typical low liquidity August fashion, market makers were merciless pounding gold to within a hair’s breadth of $1900 as the steam roller got heading downhill when the afternoon Shanghai session saw waves of Asia banks selling en masse.”

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Whether or not gold can regain its previous highs will depend on whether there is more room for downside in real yields or more dovish policies by the US Federal Reserve. Still, the possibility of squeezy price action remains in play after the US Bond market sent out the most explicit warning last week.