Gold futures settled higher on 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.
Prices found some support from data on U.S. initial jobless claims, which showed a climb of 61,000 to 719,000, compared against estimates for a gain of 675,000.
The jobless claims numbers were “very poor,” with the amount of claims coming in above market estimates, Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch. That lifted demand for haven gold.
The most-active June gold contract
climbed $12.80, or nearly 0.8%, to settle at $1,728.40 an ounce, after a 1.8% gain a day ago.
Markets will be closed for Good Friday. For the holiday-shorted week, gold prices tracking the most-active contracts lost roughly 0.2%, FactSet data show.
The move for gold also comes as the 10-year Treasury note yield
retreated below 1.7% and the dollar
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.
Prices for the metal briefly pared some of their gains following more upbeat U.S. economic data Thursday. 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.
Biden’s infrastructure plan, “while massive, is actually very light on real infrastructure building anytime soon,” said Wright. It’s “more a revision of the corporate and U.S. taxpayer code” with about $120 billion in spending for infrastructure out of over $2.2 trillion proposed.
“This increase in debt issuances coming is turning the dollar rally around” and helped support the gold market Thursday, he said. Still, he does “not believe the weakness in gold is over yet and given it is the day before a holiday weekend, we could anticipate gold to be soft next week as well.”
Among other metals traded on Comex, May silver
rose 1.7% to $24.95 an ounce and May copper
shed 0.1% to $3.99 a pound. July platinum
added 1.4% to $1,208.60 an ounce and June palladium
rose 1.4% to $2,655.80 an ounce.