Gold prices experienced a slight decline on Friday, with the precious metal on track for a weekly fall. This drop is attributed to the rise in Treasury yields, which has made non-yielding bullion less attractive for investors. The spotlight is now on next week’s US inflation data, with investors looking for clues on the timing of the Federal Reserve’s interest rate cuts.
Spot gold was down 0.5% at $2,022.86 per ounce, and US gold futures settled 0.4% lower at $2038.7. The increase in benchmark 10-year U.S. Treasury yields to a two-week high and two-year yields hitting an almost two-month high has put pressure on gold prices.
Chief market analyst Everett Millman at Gainesville Coins expressed his belief that the Federal Reserve will likely keep rates higher for longer, leading most central banks to follow suit. He also added that there is a strong floor support for gold at about $1,960 and does not expect to see it go below that level.
Furthermore, Fed officials, including Chairman Jerome Powell, have made it clear that they want to see more evidence of inflation continuing to decline before considering cutting rates. Additionally, the pricing of auto-catalyst metal palladium fell below that of platinum for the first time since April 2018 on Thursday.
In terms of other precious metals, spot silver also experienced a slight decline of 0.2% to $22.53. The overall trend indicates that the gold price may continue to trend lower in the short term.
Additional insight:
The impact of Treasury yields on gold prices is a dynamic that investors should continue to monitor. As Treasury yields rise, the opportunity cost of holding non-yielding assets like gold increases, making it less attractive to investors. The upcoming US inflation data will be crucial in providing insight into the Federal Reserve’s approach to interest rates, which will play a significant role in determining the direction of gold prices. Furthermore, the inverse relationship between palladium and platinum pricing is worth noting, as it may have ripple effects in the precious metals market.
