Gold futures contracts were under pressure Monday, easing back after posting their biggest weekly climb since December.
“Gold is looking for direction at present,” said Jeff Wright, chief investment officer at Wolfpack Capital, with “no one strong mover…influencing or driving” prices.
“The short covering from last week is over for now and gold is seeking a new catalyst before moving in either direction,” Wright told MarketWatch. “It is also a big equities earnings week and this can lead to less interest in gold from retail traders more focused on equity markets.” U.S. benchmark stock indexes moved lower in Monday dealings.
At last check, June gold was off $6.80, or 0.4%, to trade at $1,773.40 an ounce, after the metal ended Friday with a weekly rise of about 2%, marking its biggest weekly advance since the period ended Dec. 18, 2020, according to Dow Jones Market Data.
May silver also shed 23.5 cents, or 0.9%, to $25.87 an ounce.
The 10-year Treasury note was yielding 1.59%, below its recent range between 1.60% and 1.75%. A fall in government debt yields can boost appetite for precious metals which don’t earn a coupon.
The dollar was down 0.5% at 91.147, as gauged by the ICE U.S. Dollar Index, a measure of the buck against a half-dozen currencies.
Some strategists pointed to growing tensions between Russia and the U.S. as catalyst that could ultimately flip precious metals higher, as well as lingering concerns about COVID vaccine rollouts globally.
The Wall Street Journal reported that U.S. health authorities recommend pausing the use of the Johnson & Johnson vaccine due to concerns about improper treatment of blood clots, and officials are now weighing limits to the use of the vaccine to older people.
White House chief medical adviser Dr. Anthony Fauci said he expects the U.S. will resume using the J&J vaccine and said a decision could come by Friday during a Sunday talk show.
That said, evidence of economic recovery in the U.S. has bolstered buying of assets considered risky and undercut demand for bullion in the short term.
“Gold drew ample strength from falling Treasury yields and a weaker dollar last week,” wrote Lukman Otunuga, senior research analyst at FXTM, in a daily note.
“The commodity is up over 4% this month and has the ability to push higher amid rising tensions between the United States and Russia. However, gold bears could still make an appearance as economic data from the two largest economies in the world remains highly encouraging and may boost global sentiment,” he wrote.
“If risk-on becomes the name of the game, it could hit appetite for safe-haven gold,” he said.
Separately, Russia on Friday sanctioned eight senior U.S. officials, including Federal Bureau of Investigation Director Christopher Wray and Director of National Intelligence Avril Haines, after President Joe Biden announced sweeping sanctions against Russia and warned against a “cycle of escalation.”
Among other Comex metals, copper prices saw the biggest gains, with the May contract up 2% at $4.25 a pound. Prices ended last week more than 3% higher.
The trend for copper remains “decidedly bullish” and copper should “continue to grind to new highs barring an unexpected turn for the worst in economic data or normalization expectations,” analysts at Sevens Report Research wrote in Monday’s newsletter.
July platinum inched higher by 0.3% to $1,212.80 an ounce and June palladium traded at $2,821.50 an ounce, up 1.7%, after settling at a record on Friday.
Source: Marketwatch