Gold futures struggled to hold $3,300 to finish the volatile trading week. The yellow metal has slumped since reaching an intraday all-time high of $3,509 as easing US-China trade tensions lifted the US dollar. But with Treasury yields sliding, gold prices could renew their upward activity.
June gold futures plunged $44.90, or 1.32%, to $3,304.50 per ounce at 18:06 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold prices will register a weekly loss of more than 1%, but they remain up 25% this year.
Silver, the sister commodity to gold, slipped below $33 to close out the trading week. May silver futures tumbled $0.583, or 1.74%, to $32.915 an ounce. The white metal enjoyed a 1% weekly gain and is up more than 12% year-to-date.
The primary driver for gold’s slide on Friday was a strengthening US dollar.
The US Dollar Index (DXY), a measure of the greenback against a weighted basket of currencies, rose 0.1% and posted a weekly boost of 0.1%. While it is down 8% year-to-date, the index is showing signs of life as US-China tensions might be de-escalating.
A stronger buck is typically bearish for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.
Market watchers also say there likely has been profit-taking among investors.
“The apparent detente on tariffs is negatively affecting gold prices. But so far we’ve not seen substantial liquidations,” said TD Securities commodity strategist Daniel Ghali, according to CNBC.
“However, we know that they’ve continued to buy the dip over the last few sessions, so we think gold can resume its upward trajectory.”
President Donald Trump and senior administration officials have signaled a potential de-escalation in the two nation’s trade dispute. While Trump has told the press that direct negotiations are underway, Beijing has denied these reports and called it “fake news.”
“Trade war concerns were the main reason behind all the prior gold buying. But it could still be a while before we see actual progress and so those concerns are not completely gone just yet,” said Fawad Razaqzada, market analyst at City Index and FOREX.com.
Meanwhile, gold prices may have found support on declining US Treasury yields. The benchmark ten-year yield erased 4.5 basis points to 4.25%.
Weaker yields are typically bullish for non-yielding bullion since it reduces the opportunity cost of holding gold.
Next week could be significant for gold and the broader financial markets, with first-quarter GDP, inflation, Treasury refunding estimates, and the April jobs report coming out.
In other metal markets, May copper futures shed $0.025, or 0.51%, to $4.831 per pound. May platinum futures dropped $9.00, or 0.92%, to $971.30 an ounce. May palladium futures fell $17.60, or 1.85%, to $936.00 an ounce.