Gold futures inched lower on Friday to post a fall for the week, on the back of strength in U.S. Treasury yields, but prices still scored their first monthly gain of the year.
Gold had “a challenging week and has been seeking direction given a number of conflicting factors, which include inflation, the U.S. dollar and U.S. GDP”, Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch.
While stuck in a trading range, the precious metal has “continued to be challenged in finding traction when fundamentals show it should be appreciating more,” he said, adding that the Biden administration’s spending proposals “should be more of a boost for gold.”
Wright said he’s still focused on the U.S. dollar, inflation and other signs of recovery going into May and that gold will be “range bound at best” from $1,700 to $1,800 in the near term, “with a lack of safe-haven interest even when tensions have risen related to events around the globe.”
Based on the most-active contracts, gold fell 0.6% for the week, but saw a monthly rise of about 3% — the first monthly climb of the year so far — while silver ended down around 0.8% for the week, settling up 5.5% for the month, according to FactSet data.
The yield on the 10-year Treasury note
was at 1.629% in Friday dealings, trading up for the week, but down for the month. Rising yields can be a headwind for gold because they raise the opportunity cost of holding nonyielding assets.
Gold remains “influenced by U.S. Treasury yields, the dollar’s performance, reflation trade, and global risk sentiment,” said Lukman Otunuga, senior research analyst at FXTM.
“Given the conflicting forces pulling and tugging at the precious metal, the next few weeks could be wild and rocky,” he warned. In the short term, “gold is likely to remain choppy on the daily charts until a fresh directional catalyst is brought into the picture.”
In other Comex metals trading, July copper
shed 0.4% to $4.47 a pound, ending nearly 12% higher for the month.
added 0.6% to $1,205.20 an ounce, for a monthly rise of 1.2%, while June palladium
tacked on 0.2% to $2,953.70 an ounce, tallying another record high finish and a monthly rise of almost 13%, the third consecutive monthly rise.