Gold price ends streak trading above $2,000/oz mark after 61 days

Gold closed at $1,995 per ounce on Feb. 13, ending a 61-day streak of closing the market above $2,000/oz.

Before the recent streak, gold had only closed above $2,000 a few times since first cracking that barrier in 2020, with the previous longest streak lasting 14 days. Gold reached a record high of $2,079/oz on Dec. 27, 2023, before trending downward through the start of 2024.

Gold prices were holding firm until the US released the January consumer price index data, James Steel, chief precious metals analyst for HSBC Global Research, wrote in a Feb. 13 note. The consumer price index increased 0.3% month over month in January, the largest monthly jump since September 2023, while jumping 3.1% year over year.

Increasing inflation has pushed back on hopes that the Fed will cut interest rates. The higher-than-expected rate of inflation "entirely changed the market dynamic, not only of gold but also for the whole precious metals complex," Steel wrote.

"The immediate reaction for gold was a sharp selloff as yields jumped and the [US dollar] rallied," Steel wrote. "The yield on the 2-year Treasury rose to near 4.64% from 4.47%. Although the [US dollar] did not rally as vigorously as yields rose, it moved sufficiently higher to keep the downward pressure on gold."

As the price of gold bullion fell, sell-stops kicked in and trading in options accelerated the downward trend below the $2,000/oz level, Steel said.

Industry observers expect a volatile market for gold in 2024 as investors watch trends in monetary policy to address inflation and geopolitical uncertainty that could lead buyers to invest in gold as a safe haven investment. Central banks have also been buying up gold at a high rate, supporting the price.