Futures for gold on Friday headed lower, but the precious metal was holding on to a slight weekly gain, as investors sold bullion at the end of the week amid a rise in U.S. government bond yields and a firming of the dollar.
“Yes, yields have risen along with the dollar, which is not great news for the buck-denominated metal,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a research note.
That said, Razaqzada speculates that signs of a long haul in the economic recovery from the COVID-19 pandemic, highlighted by stubbornly high claims for joblessness in America, and the Federal Reserve’s commitment to maintaining interest rates near 0%, are factors that should limit the decline for gold, if not eventually help it to overcome its near-term softness.
“Therefore, I think bond yields will likely struggle to rise further than they already have, and the US dollar could remain under pressure. As a result, buck-denominated gold could be about to pop back higher,” he wrote.
The buck, as gauged by the ICE U.S. Dollar Index, was up 0.1% but down 0.5% so far this week, while the yield for the 10-year Treasury note was at around 1.18% Friday, holding around its highest level since March.
Against that backdrop. Gold for April delivery was trading off $13,80, or 0.7%, at $1,813 an ounce, following a 0.9% slide in the prior session. On Wednesday, prices notched their highest settlement since Feb. 1, FactSet data show.
Meanwhile, March silver was picking up 4 cents, or 0.2%, to trade around $27.10 an ounce, following a 0.1% slide on Thursday.
For the week, gold is maintaining a gain of less than 0.1%, while silver is headed for a weekly advance of about 0.3%, according to FactSet data based on the most-active contract.