Gold declines as rising U.S. yields keep dollar firm
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Gold prices fell on Friday as the dollar held onto its gains from the previous sessions on the
back of rising U.S. Treasury yields, while the U.S. Federal Reserve’s forecast of a strong economic rebound added further pressure on the safe-haven metal.
Spot gold was down 0.3% to $1,731.86 per ounce by 0340 GMT, after hitting a two-week high of $1,755.25 on Thursday. U.S. gold futures were down 0.1% to $1,731.
“The dollar is reacting to higher yields like it normally does, but it’s also reacting to a stronger U.S. economic situation that seems to be picking up at a quicker pace,” said
Stephen Innes, chief global market strategist at financial services firm Axi. “If the economy gets stronger and there’s still no inflation, that is bad for gold.”
The dollar index rebounded from a two-week low, supported by surging yields that held close to a more than one-year high, making the non-yielding bullion less attractive.
Yields jumped as the Federal Open Market Committee (FOMC) pledged to press on with aggressive monetary stimulus, saying a near-term spike in inflation would prove temporary amid their projections for the strongest U.S economic growth in nearly 40 years.
“Gold’s upside looks limited by rising yields and buoyant risky assets… Talks around tapering asset purchases will be the key headwind later this year,” ANZ analysts said in a note.
Palladium shed 0.3% to $2,674.44, having risen 7.3% in the previous session to hit its highest since Feb. 28, 2020 after a cut in output estimates by the world’s biggest producer of the metal, Russia’s Nornickel Nickel, fuelledsupply concerns.
“Tighter supply and the revival of the auto sector still bode well for Platinum Group Metals prices,” ANZ said.
The auto-catalyst metal was on track for a 12% weekly jump, the biggest since early November 2020.
Silver fell 0.3% to $25.98 an ounce and platinum was down 0.5% to $1,200.72.
