Gold futures are attempting to stay above $1,800 to finish the trading week. The yellow metal is poised for its first weekly loss in five weeks, adding to its year-to-date drop of more than 5%. With a rising US dollar and a rallying stock market, is this the best gold prices will do in the second half of 2021?
August gold futures fell $5.20, or 0.29%, to $1,800.30 per ounce at 15:40 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold is on track for a weekly slide of 0.7%.
Silver, the sister commodity to gold, is also trying to avoid declining below $25. September silver futures tumbled $0.136, or 0.51%, to $25.25 per ounce. The white metal will also record a weekly loss of about 1.8%. So far this year, silver prices are down nearly 5%.
But while it might look like gold is in a bear market, market analysts think that any movement below the $1,800 threshold could be a buying opportunity and a moment to add to long positions.
“Choppiness elsewhere begets choppiness for gold, but we still think there are underappreciated downside risks for current prices, as our forecasts currently indicate,” said Christopher Louney, analyst at RBC Capital Markets, in a research note. “Economic data, Fed policy expectations, and news around prevailing COVID strains will continue to dominate both directly for gold and indirectly (through moves in the dollar, rates, and equities).”
That said, gold is mostly slumping on a strengthening greenback and mostly higher bonds.
The US Dollar Index (DXY), which gauges the greenback against a basket of currencies, rose 0.12% to 92.93, from an opening of 92.82. The index will enjoy a weekly boost of 0.3%, contributing to its year-to-date rally of 3.4%. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.
The benchmark 10-year yield rose 0.023% to 1.29%. The one-year bill dipped 0.003% to 0.068%, but the 30-year bond jumped 0.031% to 1.935%. Rising Treasury yields are bearish for for gold the opportunity cost is higher for holding non-yielding bullion.
In other metal markets, September copper futures jumped $0.029, or 0.67%, to $4.3665 per pound. September platinum futures plummeted $36.60, or 3.36%, to $1,054.00 per ounce. September palladium futures fell $39.60, or 1.46%, to $2,665.00 an ounce.