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Bannockburn: gold at risk of closing below 200-day average

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Gold is at risk of closing below its 200-day moving average for the first time in two years as markets collectively enter a new phase of turmoil, said Marc Chandler, managing director of Bannockburn Global Forex. “Bonds are no longer proving to be the safe haven for investors fleeing stocks,” he said. “The tremendous fiscal and monetary efforts, with more likely to come, have sparked a dramatic rise in yields. Meanwhile, equities are getting crushed again.” Stock bourses in the Asia-Pacific region and Europe posted steep losses overnight, and the S&P stock-index futures are pointing to another weaker open on Wall Street after a big rise on Tuesday. “It has not risen for two consecutive sessions since Feb. 11-12,” Chandler pointed out. “In Europe, the more profound carnage is in the bond market today, where Italy's 10-year yield is up over 50 bp [basis points]. It is approaching 3% after being below 1% as recently as March 4. The German 10-year Bund yield is 17 bp higher near minus 26 bp. It was at minus 90 bp on March 9.” Chandler pointed out that the U.S. 10-year yield rose 36 basis points Tuesday and is up another seven Wednesday to 1.15%. Meanwhile, the U.S. dollar remains strong against most of major currencies, with the exception of the Japanese yen and Swiss franc. As of an early-morning research note, Chandler noted: “Gold is off around $30 and continues to flirt with the 200-day moving average (~$1500), which it has not closed below for a couple of years.”

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