Gold fell on Friday as U.S. Treasury yields rose, though the metal was on course for its best week in five helped by hopes of a large U.S. stimulus.
Spot gold fell 0.5% to $1,861.10 per ounce by 0724 GMT, retreating from its highest since Jan. 8 it hit on Thursday. For the week, it was up 1.9% – its biggest weekly gain since the week ended Dec. 18.
U.S. gold futures eased 0.3% to $1,861.
“Gold is struggling due to a lift in nominal yields, which came off the back of strong U.S. jobless claims number, also the European Central Bank (ECB) came out a little less dovish than the market would like,” said IG Market analyst Kyle Rodda.
Benchmark 10-year U.S. Treasury yields held firm above 1%, helping the dollar rise.
U.S. weekly jobless claims decreased modestly last week, but concerns over the impact of COVID-19 persisted.
European Central Bank President Christine Lagarde indicated on Thursday the bank may not use the Pandemic Emergency Purchase Programme in full if financial conditions remain favourable.
“The nervousness on whether the U.S. stimulus is going to pass as smoothly as the market has originally thought is weighing on gold,” said Jeffrey Halley, a senior market analyst at OANDA.
U.S. President Joe Biden’s $1.9 trillion stimulus plan will have to pass through the Senate, where the size of the aid might get watered down, according to analysts.
“Ultimately, the outlook is still constructive for gold, as the Federal Reserve won’t taper its balance sheet and let yields rise too high. But … the trend is to the downside for the time being,” Rodda said.
Silver shed 1.8% to $25.47 an ounce, but was set to register its best week in five, up 3.1% so far.
Platinum fell 2% to $1,103.61, but was set to post its second consecutive weekly gain, up 2.8%.
Palladium eased 0.1% to $2,360.03.
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