Gold futures settle the week below the important psychological level of $1,900. The yellow metal has been struggling, despite rising US inflation that is typically bullish for the metals market. With a strengthening US dollar and financial markets hardly reacting to rising prices, will gold fail to surge?
July gold futures tumbled $14.40, or 0.76%, to $1,882.00 per ounce at 16:40 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold is on track for a weekly loss of 0.7%, bringing its year-to-date loss to more than 1%.
Silver, the sister commodity to gold, is finishing the week above $28. July silver futures added $0.104, or 0.37%, to $28.135 per ounce. The white metal will post a weekly boost of about 0.8%, lifting its 2021 rally to above 6%.
The yellow metal is taking a hit mostly on a climbing Federal Reserve Note. The US Dollar Index (DXY), which measures the greenback against a basket of currencies, soared 0.58% to 90.60. The index will record a weekly increase of 0.5%, allowing the DXY to enter into positive territory. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.
Bonds were mixed at the end of the trading week, with the 10-year yield down 0.004% to 1.455%. The one-year bill rose 0.003% to 0.51%, while the 30-year bond dropped 0.012% to 2.142%. Higher Treasury yields are bearish for gold since it lifts the opportunity cost of holding non-yielding bullion.
This week, it was reported that the US annual inflation rate clocked in at 5%, the highest it has been since September 2008. Although consumer prices are rising, gold is not responding as gold bugs would have anticipated. Investors generally pour into safe-haven assets, like precious metals, in an inflationary environment.
Still, market analysts assert that the Fed’s response to this higher inflation is good for gold because the Eccles Building is likely to keep interest rates at historic lows. Also, if the central bank is refusing to act, it might spook some investors and force traders into gold investments.
In other metal commodities, July copper futures picked up $0.042, or 0.94%, to $4.527 per pound. July platinum futures edged up $4.30, or 0.38%, to $1,150.30 per ounce. July palladium futures tacked on $3.80, or 0.14%, to $2,781.50 an ounce.