Gold futures are slumping to close out the trading week, failing to crack the critical $1,800 market. The yellow metal is poised for a weekly loss as Treasury yields are mostly green across the board. A weaker US dollar limited the precious metal’s loss on Friday. But while gold ended the week lower, there are various metrics to support gold prices in the coming months.
May gold futures tumbled $8.40, or 0.47%, to $1,773.60 per ounce at 15:12 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold is on track for a mild weekly slide of 0.2%, adding to its year-to-date decline of nearly 7%.
Silver, the sister commodity to gold, is also in the red to close out the trading week. June silver futures declined $0.18, or 0.69%, to $26.00 per ounce. The white metal endured a slight weekly loss of 0.15%, adding to its 2021 dip of nearly 2%.
Global financial markets are monitoring the resurgence in coronavirus infections in India and Japan. Both countries have witnessed a dramatic increase in new cases, with India breaking the global COVID-19 record for two straight days. Investors are also keeping an eye on President Joe Biden’s proposal to raise the capital gains tax to 39.6% as part of his efforts to fund education and child care.
These developments did weigh initially on stocks, bonds, and the greenback, but some of the pressure has been alleviated.
The benchmark 10-year Treasury yield rose 0.014% to 1.57%. The one-year bill dipped 0.002% to 0.061%, while the 30-year bond jumped 0.013% to 2.254%. The performance of the bond market is crucial for non-yielding metal commodities since it lifts the opportunity cost.
The US Dollar Index (DXY), which gauges the buck against a basket of currencies, dropped 0.26% to 91.09, from an opening of 91.29. The DXY will post a weekly loss of 0.5%, paring its year-to-date rally to below 1.3%. A weaker greenback is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.
In industry data, gold exchange-traded fund (ETF) outflows have slowed in recent weeks, with daily average outflows running at 1.5 tons in April. This is down from about six tons in March.
Carsten Fritsch, analyst at Commerzbank, said in a research note:
“We expect ETF inflows and a rising gold price again in the second half of the year.
After all, the environment for gold should brighten noticeably. As the Fed will stick to its ultra-loose monetary policy for a long time, bond yields and the US dollar should ease from midyear. Thus, headwinds will turn into tailwinds.”
In other metal markets, May copper futures surged $0.052, or 1.22%, to $4.325 per pound. May platinum futures added $17.50, or 1.45%, to $1,226.00 per ounce. May palladium futures advanced $10.60, or 0.37%, to $2,853.50 an ounce.