Gold futures hovered near unchanged early Friday, after posting its biggest one-day gain in about a month as Treasury yields and the U.S. dollar retreated.
Gold for June delivery GC00 GCM22 was up 80 cents, or less than 0.1%, at $1,842 an ounce on Comex, flipping between small gains and losses. It jumped1.4% Thursday for the best daily percentage rise for the most-active contract since April 12. The yellow metal was on track for a rise of nearly 2% on the week, which would break a string of four consecutive weekly declines.
July silver SIN22 was up 5.7 cents, or 0.3%, at $21.965 an ounce.
Treasurys have rallied this week, pulling back yields, as a sharp selloff for equities that has left the S&P 500 index SPX on the brink of a bear market stirred demand for safe-haven assets. The yield on the 10-year note hit a 3 1/2-year intraday high above 3.2% early last week, but has pulled back to around 2.86%.
The pullback in yields was seen giving gold some breathing room. Rising yields raise the opportunity cost of holding nonyielding assets, but skeptics questioned whether the respite would last.
“Well, the falling yields have been the major trigger of the gold rebound yesterday, therefore the positive momentum could remain short lived, as the medium-term trend for the U.S. yields remains comfortably positive on the back of prospects of higher interest rates in the U.S.,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in a note. “The Federal Reserve (Fed) declared war against inflation, and it will raise the interest rates. The higher rates will have a straight positive impact on the yields.”
The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was headed for a 1.6% retreat this week after trading at a 20-year high earlier this month. A stronger dollar can also be a headwind for commodities priced in the unit, making them more expensive to users of other currencies.
Gold is at a crossroads on the charts, Ozkardeskaya said, testing resistance at the 200-day moving average near $1.837 an ounce, a level that also “coincides with the negative correction band top, building since mid-April.”
If gold moves convincingly above the 200-day moving average, “we could see the rally persist toward the $1880-$1900 range. And the Russian shock on gold supply could support that move,” she said. ”I still maintain my bearish outlook for gold in the medium to long run based on the expectation of higher yields, as the Fed won’t get rid of inflation fast enough. ”
In other metals trade, July copper HGN22 rose 0.7% to $4.312 a pound.
July platinum PLN22 edged up 0.2% to $955.30 an ounce, while June palladium PAM22 ticked 0.1% higher to $1,979.50 an ounce.