Gold Prices Rise But Remain On Track for Weekly Slump

May 19, 2018

New York (May 19)  Gold prices rose on Friday as a weaker dollar and falling U.S. Treasury yields bolstered demand for the precious metal but gains were limited as traders remained wary of a rebound in yields.

Gold futures for June delivery on the Comex division of the New York Mercantile Exchange rose by $2.00, or 0.16%, to $1,291.60 a troy ounce.

Gold prices recovered from lows of $1,285.20 as United States 10-Year turned negative, pressuring the dollar to give up some of its gains after hitting a fresh five-month high.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose to a five-month high of 93.74 before paring some of its gains.

A stronger dollar makes gold more expensive for holders of foreign currency, reducing demand for the yellow metal.

Despite the uptick in gold prices they remained on track for their biggest weekly fall of the year as they struggled to claw back losses suffered earlier during the week, when U.S. bond yields rallied sharply.

Analysts have suggested 10-year treasury bond prices – which trade inversely to yields – could come under pressure, sending yields higher. This may pressure gold prices as a rise in U.S. rates, lift the opportunity cost of holding gold as it pays no interest.

“The break in 3.10% overnight and a yield high of 3.122% means that there are few significant hurdles for 10-year treasury bonds sell off further until support at 3.21-3.24%,” Bank of Montreal said Thursday.

In other precious metal trade, silver futures fell 0.13% to $16.46 a troy ounce, while platinum futures fell 0.65% to $886.30 an ounce.

Copper fell 0.74% to $3.07.

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