The price of gold drops weekly as the dollar weakens
Gold prices edged up on Friday, offsetting a weekly loss as the dollar slipped against most G10 currencies, as bond yields retreated from session highs after the latest spending data Americans showed declines in February.
Spot gold rose 0.2% to $ 1,731.75 an ounce at 2:30 p.m. EST, while US gold futures rose 0.3% to $ 1,729.50 l ‘ounce. However, gold is still heading towards its first weekly loss in three, underlining its choppy comeback from a nine-month low.
Optimism over a recovery from the pandemic, a resilient dollar and a rise in bond rates that reduce the appeal of unpaid bullion continue to thwart a sustained rebound in the safe haven metal.
“Gold prices remain in limbo despite recent weakness in real yields, highlighting the regime shift from an inflation hedge product to a safe haven today,” analysts said. TD Securities headed by Bart Melek in a Bloomberg memo. “This continues to cast a veil over the prospects for increased investment flows.”
“Dips are bought and rallies are sold (in the gold market) … there are clearly two definitive sides of a coin and that is the main focal point,” David Meger told Reuters, director of metals trading at High Ridge Futures. .
“A firmer dollar and rising yields putting pressure on gold are one side of the coin and rising coronavirus cases and the Fed’s low interest rate policy are another,” Meger added , noting that it remains unclear which side will ultimately prevail.
“But, beyond the short term, the macroeconomic backdrop should remain favorable for gold as the weakening trend in the dollar resumes and we expect real yields to remain negative,” the analyst said. Standard Chartered Suki Cooper in a note.
