Gold Continued To Seek Meaningful Support On Friday

Investing.com - Gold continued to seek meaningful support on Friday, posting a third straight weekly loss as it struggled to recover from a collapse to $1,600 levels triggered by a spike in U.S. bond yields and the dollar.

Gold for April delivery on New York’s Comex settled up $1.10, or less than 0.1%, at $1,701.80 an ounce. For the week though, it fell 1.5%, extending last week’s decline of 2.7% and the previous week’s drop of 2.5%. In Friday’s session, it fell to as low as $1,684.05 — the lowest price since April 2020 for a benchmark gold futures.

“It is possible we will see gold reach above $1,700 again in the near future but if it does, it will likely be brief and I would consider it a selling opportunity,” said Eric Scoles, analyst at Chicago’s Blueline Futures.

“This market is on track to keep going down and I expect to see it below 1600 with potential to drop further from there. Big picture: 2020 gave us one of the most bullish possible situations for gold but that is ending. We are recovering and money is going to move into assets where it will grow and gold prices will suffer.”

Spot gold, which reflects real-time trades in bullion, was up $1.53, or 0.1%, at $1,698.86, after a bottom $1,687.45 — its lowest since June 2020. Hedge funds and other money managers sometimes rely more on the spot price than futures for determining direction in gold.

Gold’s tumble this week was driven by the same phenomenon of the past two weeks — surging bond yields and the dollar

Yields and the greenback soared anew this week after Federal Reserve Chairman Jerome Powell said the central bank was unlikely to step up bond buying to tame fears of a sudden inflation spike from an U.S. economy increasingly becoming unshackled from the Covid-19 pandemic.

While gold itself has been touted and used as a hedge against inflation for decades, that quality has been played down for months by markets. The yellow metal has fallen from grace since August, when it hit record highs of nearly $2,090. Losses in gold have accelerated since the November breakthroughs in Covid-19 vaccines.

Traders had expected gold to see another meltdown on Friday after the Labor Department reported a growth of 379,000 jobs for February in a pandemic-suppressed market.

While that number was way above the 182,000 jobs growth forecast by economists, it also came on the back of a flat trendline for unemployment, which stayed at 6.2 percentage points.

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