Gold futures edged lower Friday, but were on track for weekly gains as the yellow metal finds support after a continued surge in inflation.
Gold for April delivery GC00, -0.24% GCJ22, -0.24% fell $ 5.90, or 0.3%, to $ 1,831.50 an ounce on Comex, on track for a 1.3% weekly rise. March silver SIH22, -2.03% was down 51.7 cents, or 2.2%, at $ 23.005 an ounce, headed for a 2.3% weekly advance.
Gold extended its winning streak to a fifth session on Thursday, even as data showed the January consumer-price index rose at a hotter-than-expected year-over-year rate of 7.5%. Treasury yields rose sharply as investors priced in a more aggressive Federal Reserve and St. Louis Federal Reserve Bank President James Bullard called for 100 basis points of rate increases by July 1.
Rising yields can be a drag on gold because they raise the opportunity cost of holding nonyielding assets.
“We should note that rising inflation and the return of positive yields could be challenging…for precious metals. But so far investors are still trusting gold, which could be an interesting hedging in case of market disruption,” said Carlo Alberto De Casa, external market analyst at Kinesis Money, in a note.
“In this scenario, gold is also representing a hedge in case central banks would not be able to contain inflation,” he said.
From a technical view, resistance for gold stands at the $ 1,835 an ounce threshold, De Casa said, while the first major support zone is seen at the $ 1,800 level.