Gold Heads for Weekly Loss as Dollar and Yields Rebound

Gold fell as Treasury yields climbed from near a three-month low and the dollar strengthened. The metal erased some short-lived gains that were made in the wake of a U.S. inflation report.

Thursday’s U.S. report on the consumer price index showed that price increases were largely driven by categories associated with economic reopenings, bolstering the view that inflation pressures may ease later in the year. With the Federal Reserve setting a high bar for reconsidering its dovish stance, the data ended up stoking risk appetite across global markets -- pressuring demand for bullion as a haven.

Spot gold lost 1.2% to $1,876.03 an ounce at 4:42 p.m. in New York, after climbing 0.5% on Thursday, and is heading for a second straight weekly loss. Futures for August delivery fell 0.9% to settle at $1,879.60. Spot silver, platinum and palladium all declined. The Bloomberg Dollar Spot Index rose 0.5%.

“Gold’s failure to break $1900/oz despite the surprise non-farm payrolls and CPI inflation prints should catalyze some CTA selling as upside momentum wanes,” TD Securities analysts led by Bart Melek said in a note.

Gold Heads for Weekly Loss as Dollar and Yields Rebound

Bullion is holding near $1,900 an ounce, with market reaction suggesting that traders are aligning with the Fed’s view that inflationary pressures are temporary and that any changes in ultra-accommodative policy will happen gradually. Investors will now turn their attention to the Fed’s June 15-16 meeting for guidance on its policy path.

Also on Thursday, European Central Bank President Christine Lagarde renewed a pledge to deliver faster bond buying even as officials acknowledged for the first time since 2018 that the euro-zone economy is no longer overshadowed by risks to its growth outlook.

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