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Gold futures headed lower early Friday as the precious metal pulled back after two straight days of gains. Higher yields in government debt have been attributed to some of the softness in the gold rally in recent days, with climbing rates in Treasurys providing some headwind for bullion, which doesn’t offer a yield.
Investors also were parsing economic reports in the U.S. that could potentially complicate trading in precious metals as the market assesses the impact of the COVID-19 pandemic on the national economy.
A report on retail sales rose 1.2% for the month, coming in weaker than a forecast for an increase of 2.3% in July from economists. Stripping out autos, however, the gain was 1.9%.
Separately, a report on U.S. productivity rose at an annualized rate at 7.3% in the second quarter, far surpassing expectations for a reading of 1.4%, based on average estimates from economists polled by MarketWatch.
Meanwhile, the U.S. 10-year Treasury note yield TMUBMUSD10Y, 0.698% was trading near an eight-week high at around 0.70%, compared with 0.562% last Friday.
Investors said that precious metals may be facing some cooling in a rally that has petered out after a brisk run-up, with a recent level at around $1,960 an ounce, serving as near-term resistance, experts say.
“The gold recovery trade over the last couple of days has run out of steam, with the yellow metal slipping a little today after running into some resistance around $1,960,” wrote Craig Erlam, senior market analyst at Oanda.
December gold GCZ20, -0.62% GC00, -0.62% retreated $12.20, or 0.6%, at $1,958 an ounce, after climbing 1.1% on Thursday. Gold prices were looking at a 3.3% weekly decline, based on the most-active contract’s settlement last Friday, which would snap a nine-week win streak.
Meanwhile, September silver prices SIU20, -3.36% were off 89 cents, or 3.2%, at $26.82, after surging 6.7% a day ago. Silver was tracking a 2.8% weekly loss. .
The U.S.’s report on sales come after a 1.1% decline in Chinese retail sales in July, versus expectations for a flat reading.
