Gold Slips on Higher Treasurys, Poised for 1% Weekly Gain

Gold futures are sliding on Friday, but they are on track for a weekly gain of at least 1%, driven mostly by inflation fears. The yellow metal slumped on rising Treasury yields and a strengthening US dollar. Gold prices have had a disappointing start to 2021, unable to maintain the momentum from most of last year.

April gold futures tumbled $5.20, or 0.3%, to $1,717.40 per ounce at 16:28 GMT on Friday on the COMEX division of the New York Mercantile Exchange. While gold has logged some impressive single-session performances, the precious metal has been chiefly bearish this year, plummeting close to 10% year-to-date.

Silver, the sister commodity to gold, fell below $26 to finish the trading week. May silver futures shed $0.353, or 1.35%, to $25.84 an ounce. The white metal will post a weekly gain of 2.2%, paring its 2021 drop to below 3%.

Two main factors are driving the metals market to end the trading week.

The US bond market rebounded from Thursday’s lackluster performance. The benchmark 10-year Treasury, which has generated quite the buzz in the broader financial markets this month, climbed 0.106% to 1.633%. The one-year bill dipped 0.002% to 0.079%, while the 30-year bond rallied 0.114%, to 2.395%.

Rising interest rates are bearish for non-yielding bullion since they increase the opportunity cost.

The US Dollar Index (DXY) also recover from Wednesday’s loss, advancing 0.25% to 91.64, from an opening of 91.43. The DXY will post a weekly decline of 0.36%, but the index is up nearly 2% year-to-date. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

Market analysts say that physical demand remains impressive in North America, Europe, and Asia amid supply chain difficulties and higher premiums. For now, demand for exchange-traded funds (ETFs) had cooled off since November when coronavirus vaccines were announced by Pfizer, Moderna, AstraZeneca, and Johnson & Johnson.

In the medium- and long-term, higher price inflation will play a contributing role in gold markets. President Joe Biden signed the Ameria Rescue Act of 2021, a $1.9 trillion coronavirus stimulus and relief package that includes $1,400 direct-income support checks. Democrats have already revealed that they are considering another massive stimulus package later this year.

In other metal markets, April copper futures slid $0.0065, or 0.16%, to $4.1325 per pound. April platinum futures shed $2.70, or 0.22%, to $1,199.60 per ounce. April palladium futures picked up $19.40, or 0.83%, to $2,361.00 an ounce.

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Published under: Gold