Gold futures led lower Friday, pulling back to two straight days of gains, with prices ready to record their first weekly loss in 10 weeks on the back of recent strength in U.S. Treasury yields.
The week began with gold trading in record highs, but will end with “several factors weighing on the price of gold,” including hopes for a COVID-19 vaccine and a rise in Treasury revenues, said Chris Gaffney, president of World Markets by TIAA Bank. Higher yields in government debt are attributed to some of the softness in the gold, which offers no yield.
The 10-year Treasury note yields TMUBMUSD10Y,
on Thursday reached its highest in eight weeks. In Friday sales, it traded at 0.698% compared to 0.562% last Friday.
“The ‘cost of carrying’ gold is negative in today’s environment because investors do not sacrifice interest in carrying hard assets such as gold,” Gaffney told MarketWatch.
December gold GCZ20,
GC00,
pulled $ 15.70, or 0.8%, back to $ 1,954.70 an ounce, after climbing 1.1% on Thursday. Gold prices saw a 3.6% weekly decline, based on the scheme of the most active contract last Friday, which would snap a nine-week streak. On Tuesday, futures prices suffered from the biggest daily dollar decline since April 15, 2013.
Meanwhile, silver prices are September SIU20,
were up 91 cents, or 3.3%, at $ 26,805, up 6.7% a day ago. Silver followed a 2.8% weekly loss.
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‘If one word could be used to describe the price action of gold this week, the’ best fit ‘would be insane.’
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“If one word could be used to describe this price action of gold this week, the best fit would be ‘insane’,” said Lukman Otunuga, senior market analyst at FXTM, MarketWatch,
“After taking an intensive profit-making session earlier in the week … the precious metal is trading above $ 1,950,” he said.
“Investors are still attracted to the precious metal thanks to US-China tensions, US stimulus and an unloved US dollar.”
Investors on Thursday also analyzed economic reports in the US to help measure the impact of the COVID-19 pandemic on the national economy. A report on U.S. retail sales rose 1.2% in July, coming in weaker than forecast.
U.S. retail sales fell short of expectations, “a sign that global recovery is slowing,” Gaffney said. “This is why a vaccine is so important. Consumers will not feel confident to travel and spend until they feel safe against the virus. ”
The US report on sales comes after a 1.1% decline in Chinese retail sales in July, against expectations for a flat reading.
Separately, a second-quarter report of U.S. productivity rose at an annual rate of 7.3%, exceeding expectations for a reading of 1.4%, based on average estimates of economists surveyed by MarketWatch . Industrial production rose in July by a better-than-expected 3%, for the third straight monthly profit.
Forecasts, gold traders will continue to oversee “the possible emergence of a ‘second wave’ of the virus in Europe and Asia,” such as interest rates, as gold will benefit if interest rates remain low, Gaffney said. Traders will also see conversations of economic stimulus and the resulting interest in debt levels, he said.
Among other metals traded on Comex Thursday September copper HGU20,
up 1.7% to $ 2,855 a pound. October platinum PLV20,
hit 0.7% at $ 975.10 per ounce and September palladium PAU20,
lost 1% to $ 2,194.50 an ounce.
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