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Gold futures edged lower Friday, on track for a weekly loss as Treasury yields bounced and the U.S. dollar edged higher.
Gold for August delivery
GC00,
GCQ21,
fell $12, or 0.7%, to $1,793.40 an ounce on Comex. September silver
SIU21,
was down 18.1 cents, or 0.7%, at $25.20 an ounce. Gold was headed for a 1.2% weekly fall, while silver is down 2.3%.
Gold was set for a loss in what’s been a choppy week in many financial asset markets. A steep selloff in equities and other assets viewed as risky to begin the week added to a safe-haven Treasury rally that drove the yield on the 10-year note
TMUBMUSD10Y,
to a five-month lows.
Investors, however, rushed in to buy the dip in stocks, while the Treasury rally lost steam, allowing yields to rise. The greenback also firmed, with the ICE U.S. Dollar Index
DXY,
on track for a 0.2% weekly rise. Higher Treasury yields can raise the opportunity cost of holding nonyielding assets, while a stronger dollar makes commodities priced in the unit more expensive to buyers using other currencies.
“Choppiness elsewhere begets choppiness for gold, but we still think there are underappreciated downside risks for current prices, as our forecasts currently indicate,” said Christopher Louney, analyst at RBC Capital Markets, in a note.
“ Economic data, Fed policy expectations, and news around prevailing COVID strains will continue to dominate both directly for gold and indirectly (through moves in the dollar, rates, and equities),” he wrote.
But with prices just below the middle of their one-year range and with ETP (exchange-traded product) flows giving back a significant share of their May rebound and thus still down significantly for the year to date, “the market remains largely unconvinced in gold prospects despite price gains and inflationary gold headlines,” Louney said.
