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Gold slips on buoyant bond yields

April 9: Gold prices fell more than 1% on Friday, weighed down by a jump in U.S. Treasury yields and a rebound in the dollar, but bullion was still on course for its first weekly gain in three weeks.

Spot gold was 0.7% lower at $1,744.07 per ounce by 1:44 p.m. EDT (1744 GMT), having hit its highest price since March 1 at $1,758.45 on Thursday. For the week, however, prices were up about 0.9%.

U.S. gold futures settled down 0.8% at $1,744.8.

“While overall, gold market is bullish short-term, with expectations of a break higher through $1,760-65, caution about fresh 10- and 30-year (Treasury) auctions and the CPI report next week are keeping yields supported, keeping gold’s advance in check,” said Tai Wong, head of base and precious metals derivatives trading at BMO.

“Yields are driving most markets at (the) moment, directly impacting USD and stocks and all three matter to gold with varying impact.”

The dollar and benchmark U.S. yields rebounded from two-week lows, reducing gold’s appeal.

U.S. producer prices increased more than expected in March, resulting in the largest annual gain in 9-1/2 years, fitting with expectations for higher inflation as the economy reopens.

“This type of potentially inflationary environment is generally viewed as supportive for gold,” said David Meger, director of metals trading at High Ridge Futures.

In a potential fillip to gold’s safe-haven appeal, U.S. Federal Reserve Chair Jerome Powell on Thursday signalled the central bank is nowhere near reducing its economic support, and warned an uptick in COVID-19 cases could slow the recovery.

“Gold’s retreat from last year’s peak is a ‘mini-correction’ in a longer bull market,” said Davis Hall, head of capital markets in Asia at Indosuez wealth management.

Silver fell 0.8% to $25.23 per ounce, while platinum shed 2.1%, to $1,203.69.

Palladium rose 0.6% to $2,640.21 per ounce, but was on track for its biggest weekly fall since the week ending Feb. 26.

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