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On this day — February 10, 2021

Chinese New Year: Chinese gold demand surges in the lead-up to Lunar New Year as families exchange gold pendants, rings and bars. Year-on-year, China's January–February gold imports run 30–50 percent above other months.

Wednesday — a normal trading day. FOMC announcements (when scheduled) typically come on Wednesdays at 2 PM ET, often producing intraday gold volatility.

Day 41 of 365 · Q1 2021 · 11.2% through the year

February 2021 gold market: Surging bond yields hit gold

Bearish

A bond-market tantrum drove real yields and gold's opportunity cost higher.

Gold fell to around $1,730 in February as a sharp 'bond tantrum' pushed US 10-year Treasury yields up toward 1.5%. Rising real yields raised the opportunity cost of holding non-yielding gold even as the economic outlook brightened.

What drove gold in February 2021

  • 10-year yield surging toward 1.5%
  • reflation and stimulus expectations
  • rising real yields
  • ETF outflows
Themes#rising yields#bond tantrum#opportunity cost

Key events in February 2021

  1. Feb 25Bond selloff accelerates; gold drops with bullion ETFs

What happened next

The yield spike peaked in March, after which gold found a floor.

For gold buyers

February showed gold's sensitivity to real yields — a brighter economy plus rising rates is the metal's least favourable backdrop.