Gold futures traded modestly lower on Monday, as a pickup in Treasury yields and the dollar helped to dull appetite for the precious commodity, which has been held in check by uncertainties about the spread of omicron and Federal Reserve policies.
Gold remains “subdued,” held back by a strong dollar and a positive tone in the equities space, said Fawad Razaqzada, market analyst at ThinkMarkets, in market update.
The most active February gold contract GCG22, -0.18% GC00, -0.18% was off $ 4.60, or 0.3%, at $ 1,779.30 an ounce, following a weekly decline of 0.1% for the most-active contract, according to Dow Jones Market Data.
March silver SIH22, -1.03%, meanwhile, was off 22.6 cents, or 1%, to trade at $ 22.255 an ounce, after putting in a weekly loss of 2.7% on Friday.
Gold rose to end last week as a weaker-than-expected jobs report was seen as unlikely to derail the Fed’s plan to reduce, monthly, market-supportive purchases of Treasurys and mortgage-backed securities, with the report leading a flight to assets perceived as safe.
However, the prospects of higher rates have weighed considerably on gold prices.
Naeem Aslam, chief market analyst at AvaTrade, wrote in a daily note that “investors should note that the Federal Reserve is still sticking to its plan to speed up tapering, which would mean a quicker rise in interest rates.”
“A surge in interest rates increases the opportunity cost of holding the precious metal and hence decreases its appeal,” the analyst wrote.
The 10-year Treasury note TMUBMUSD10Y, 1.400% was yielding 1.392%, up from 1.342%, while the dollar was up 0.2%, as gauged by the ICE U.S. Dollar Index DXY, +0.27%.
Traders await a reading on U.S. inflation, with consumer price index data due out Friday.
Read: Traders see next U.S. CPI reading close to 7% as volatile markets try to shake off omicron and Federal Reserve’s hawkish pivot
“If we do not see inflation expectations stabilize, but rather continuing to decline, then gold will fall in sympathy,” analysts at Sevens Report Research wrote in Monday’s newsletter. “Conversely, a resurgence in inflation will support gold, but the September lows at $ 1,725 remain a line-in-the-sand for the bulls.”
Other metals traded on Comex moved higher Monday, with March copper HGH22, +0.87% up 0.9% at $ 4.306 a pound.
January platinum PLF22, +0.14% tacked on 0.6% to $ 932 an ounce, while March palladium PAH22, +0.22% traded at $ 1,818 an ounce, up 0.3%.
Read: Platinum, palladium buck an overall upward trend for commodities, poised for hefty 2021 losses