Gold futures edged higher Friday as U.S. Treasury yields backed off after a spike in the previous session, with the yellow metal underpinned by inflation worries and jitters about Thursday’s slump in equities.
Gold for April delivery
rose $7.60, or 0.4%, to $1,740.10 an ounce on Comex, on track for a 1.2% weekly rise. May silver
was off 1.6 cents, or 0.1%, at $26.335 an ounce, heading for a 1.6% weekly rise.
“The tug of war continues between rising bond yields (which are weighing on gold) and the nervousness on the stock markets (which is tending to lend support),” wrote analysts at Commerzbank, in a note.
Treasury yields pulled back Friday, with the rate on the 10-year note down 3.5 basis points near 1.684% after spiking to a 14-month high in the previous session. Bond yields jumped after the Federal Reserve reinforced a dovish tone to its monetary policy at its meeting on Wednesday but expressed little concern about any tightening of financial conditions. Higher yields can be a negative for gold because they raise the opportunity cost of holding non-yielding assets.
Analysts argue that, despite higher bond yields, gold still has some attraction as an inflation hedge, given the $1.9 trillion fiscal stimulus enacted by the Biden administration this month along with the Fed’s easy money policies which are expected to see U.S. economic growth surge this year.