Gold prices face worst week in month on strong U.S. data
· Gold prices dipped on Friday, set for their worst week in a month, as U.S. Treasury yields gained on strong economic data and dented the non-yielding metal's appeal, while palladium came off the record high marked in the previous session.
· Spot gold was down 0.1% at $1,770.41 per ounce by 0626 GMT, dropped 0.3% so far in the week.
· U.S. gold futures were steady at $1,769.00 per ounce.
· Despite the decline, bullion was poised for its first
monthly gain of the year.
· "This string of consecutively strong U.S. economic data is weighing on gold," said Stephen Innes, managing partner at SPI
Asset Management, adding that people would rather book profits
on month-end after a decent run-up in gold.
· "Gold still remains bid, it is just not a strong hand right now, because of the month-end rebalancing."
· Benchmark U.S. 10-year Treasury yields hovered near their highest in more than two weeks, increasing the opportunity cost of holding non-yielding bullion.
· Earlier this week, the Fed held interest rates and its bond-buying program steady.
· "Ongoing strength in domestic data should lead to an
incrementally hawkish turn in Fed guidance over the coming
months," UBS analysts said in a note.
· Higher U.S. real rates will likely trigger further ETF outflows, UBS said, adding that they expect bullion to fall to $1,600 per ounce by year-end.
This Friday, gold seems to have resumed the downside, as the Treasury yields attempt a bounce across the curve. The $1756 21-daily moving average (DMA) support holds the key for XAU/USD, as FXstreet’s Dhwani Mehta notes.
A fresh batch of US consumer spending and consumption data awaited
“The US dollar holds steady, awaiting fresh cues from the Core PCE and personal spending data. Gold traders will continue to closely follow the risk trends, especially in light of the preliminary growth figures from Germany and the Eurozone. If the GDP numbers disappoint, it could reinforce risk-aversion across the board, knocking off higher-yielding assets such as US rates, in turn, putting a floor under gold.”
“US President Joe Biden's additional push for a $1.8 trillion social stimulus package along with the infrastructure spending proposal also keeps the gold buyers hopeful.”
“The price of gold tested the upward-sloping critical 21-daily moving average (DMA), then at $1756, which is the line in the sand for the optimists. A daily closing below the latter could extend the bearish momentum towards the 50-DMA at $1745.”
“The recovery attempts could likely remain capped around $1785-$1790, static resistance. Further up, the critical 100-DMA barrier at $1799 could be back in play.”
· Palladium rose 0.2% to $2,958.19 per ounce, after hitting an all-time high of $2,981.99 on Thursday. It was on track to post its third consecutive weekly and monthly gain as well.
· Silver fell 0.6% to $25.92 per ounce, though was poised for an over 6% monthly gain - its biggest since last December.
· Platinum was up 0.3% at $1,201.69.
Reference: Reuters, FXStreet