Gold futures on Friday retreated a day after the biggest daily gain of the month, weighed down by a rise in bond yields and a strengthening dollar.
For the week, however, both gold and silver are on track to book weekly advances, with investors wading into precious metals with some eye toward protecting themselves against choppiness in the stock market, as the global economy attempts to stage a fuller recovery from the COVID pandemic.
“A stabilizing dollar and the risk-on mood pressured the metal on Friday,” Lukman Otunuga, senior research analyst at FXTM, told MarketWatch. Still, the precious metal managed to gain support this week from “a softer dollar, falling bond yields and fresh dovish comments” from Federal Reserve Chairman Jerome Powell.
On Friday, the dollar was up 0.2%, but traded 0.7% lower for the week, as measured by the ICE U.S. Dollar Index
Dollar-priced bullion tends to move inversely with the dollar, as a stronger buck can be comparatively more expensive to overseas buyers.
Benchmark yields for government debt were climbing. The 10-year Treasury note
was yielding around 1.66%, up 2.6 basis points, though it is down from where it ended last week at around 1.72%.
Against that backdrop, June gold
fell $15.10, or 0.9%, to $1,743.10 an ounce on Comex. It ended 1% higher on Thursday to mark the highest finish for a most-active contract since Feb. 25, and largest one-day dollar and percentage climb since March 31, FactSet data show. For the week, prices based on the most-active contract traded 0.9% higher.
fell 31 cents, or 1.2% to $25.28 an ounce, but looked at a weekly rise of more than 1%.
Although the weekly trend has been higher for both gold and silver, some market participants are skeptical about the path forward for gold.
“The yellow metal is trying to complete what looks like a double bottom pattern, but as long as the price remains beneath the previous lows of around $1,760 [an] ounce, it’s tough to be optimistic,” wrote Marios Hadjikyriacos, investment analyst at XM, in a research note.
“Fundamentally, the coming months will be pivotal as inflation accelerates. If markets believe that the Fed will stick to its promise to let the economy run hot, gold will likely shine, but if inflation overshoots too much and rate-hike bets blossom again, more pain could be in store,” he wrote.
Investors have been wary of a the economy overheating in the demand rebound from the COVID shock, putting pressure on prices. Inflation has thus far remained below the Federal Reserve’s target for most of the past decade, while the U.S. labor market remains about 8.4 million jobs short of its pre-pandemic level.
In economic news Friday, the U.S. Labor Department reported that the producer price index rose 1% in March and the rate of wholesale inflation over the past 12 months climbed to 4.2% that month, the highest since September 2011. Gold prices fell toward the sessions lows after the PPI data, then pared those declines.
Also on Comex Friday, May silver
shed 0.9% to $4.06 a pound, trading 1.7% higher for the week. July platinum
fell 2.5% to $1,204.90 an ounce, poised for a weekly loss of about 0.3%. June palladium
traded at $2,636.50 an ounce, trading up 0.3% for session, but down 0.7% for the week.