Gold futures are flirting with record highs again as the precious metal is rocketing despite a flat US dollar and rising Treasury yields. Gold prices are finding support in Federal Reserve policy expectations and Chinese demand. While gold and silver have rallied, they could be poised for a pullback as they are in overbought territory.
June gold futures advanced $32.10, or 1.35%, to $2,417.70 per ounce at 17:36 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold will post a weekly gain of 2%, adding to its year-to-date gain of nearly 17%.
Silver, the sister commodity to gold, topped a three-year high this week and is continuing its ascent. July silver futures rallied $1.419, or 4.75%, to $31.295 an ounce. The white metal will enjoy a weekly increase of 10.2% and is up more than 30% year-to-date.
Financial markets shrugged off various inflation reports this week and concentrated on the headline consumer price index (CPI) reports that showed softening inflation. However, the producer price index (PPI) and import and export prices soared higher than economists’ expectations.
The easing CPI had investors betting that the US central bank would become more confident about cutting interest rates. According to the CME Fed Watch Tool, traders are penciling in two rate cuts beginning in September.
Meanwhile, gold is rallying on strengthening foreign demand as China and central banks are acquiring immense volumes of the precious metal.
“Demand in China, which contributed to the gold price rally in recent months, is becoming more crucial as the market is waiting to see if high gold prices prompt some central banks to slow down purchases and as outflows from physically backed gold exchange-traded funds continue,” CNBC reported.
Other factors that typically hinder gold have not affected prices to finish the trading week.
US Treasury yields were mostly green across the board, with the benchmark ten-year yield adding 4.5 basis points to 4.422%. The two-year yield added 3.4 basis points to 4.825%, while the 30-year bond climbed 4.4 basis points to 4.562%.
The US Dollar Index (DXY), a gauge of the buck against a basket of currencies, was flat at around 104.50. The DXY suffered a 0.8% weekly loss, paring its year-to-date jump to 3.1%.
In other metal markets, June copper futures rocketed $0.18, or 3.75%, to $5.06 a pound. June platinum futures picked up $23.00, or 2.15%, to $1,094.30 an ounce. June palladium futures advanced $10.60, or 1.06%, to $1,009.00 per ounce.