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Metals Stocks: Gold prices attempt 2nd day of gains after sharpest quarterly drop in 4 years

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An early version of this report included a headline with an incorrect timeframe reference regarding oil’s quarterly loss.

Gold futures rose Thursday, supported by a retreat in bond yields and weakness in the U.S. dollar, a day after the precious metal posted the worst quarterly loss since 2016.

The most-active June gold contract
GCM21,
+0.82%

was up $9, or 0.5%, to $1,724.600 an ounce, after a 1.8% gain a day ago.

The move for gold comes as the 10-year Treasury note yield
TMUBMUSD10Y,
1.682%

retreated below 1.7% and the dollar
DXY,
-0.26%

was pulling back from its recent rise. Softness in the U.S.-dollar can make assets priced in the currency more appealing to overseas buyers and a pull back in bond yields can lower the opportunity costs of investing in precious metals, which don’t offer a coupon, against risk-free government debt.

Some experts speculated that a combination of unwinding of bearish bullion bets and buying at the end of March, as well as rebalancing following the first three months of 2021 might be helping to give a lift to beleaguered precious metals.

“Quarter-end rebalancing and short covering may be helping the precious metal recoup some losses after what was a terrible quarter,” wrote Raffi Boyadjian, senior investment analyst at XM.

Meanwhile, commodity traders were parsing, initial jobless claims which rose 61,000 to 719,000, compared against estimates for a gain of 675,000 and last week’s 658,000 figure, which was lowered. Gold prices generally moved up in the wake of that data.

However, prices for the metal pared some of their gains after the Institute for Supply Management revealed that its manufacturing index jumped to 64.7% in March — a 38-year high — up from 60.8% in the prior month.

Investors are still also breaking down the details of President Joe Biden’s infrastructure plan, and assess the likelihood of the bills passing through Congress, which would affect the outlook for gold as market participants assess the prospects of the impact of further fiscal stimulus and tax hikes on the economy.

See: Biden rolls out $2.3 trillion infrastructure plan: ‘It’s bold, yes, and we can get it done’

Thus far, a buoyant economic data, fiscal stimulus and positive vaccine developments have weighed on gold prices, undercutting their haven appeal.

Among other metals traded on Comex, May copper
HGK21,
-0.48%

shed nearly 0.5% to $3.98 a pound. July platinum
PLN21,
+1.40%

added 1% to $1,203.40 an ounce and June palladium
PAM21,
+1.23%

rose 0.9% to $2,642.50 an ounce.

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