Gold prices fall, but head for modest weekly gain, even as U.S. dollar firms

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Gold prices fall, but head for modest weekly gain, even as U.S. dollar firms


Gold futures slid Friday morning as the U.S. dollar firmed and investors were parsing President-elect Joe Biden’s $1.9 trillion COVID-19 relief plan announced late Thursday.

Bullion has been particularly sensitive to moves in the U.S. dollar and a rise in government debt yields, which can undercut appetite for precious metals.

On Thursday, February gold prices
GC00,
-0.69%

GCG21,
-0.69%

gave up $11.40, or 0.6%, at $1,839.90, after a 0.2% decline on Thursday.

Silver for March delivery
SI00,
-3.69%

SIH21,
-3.69%
,
meanwhile, shed 92 cents, or 3.7%, to trade at $24.87 an ounce, after gold’s sister metal added 0.9%, a day ago.

For the week, gold is still holding on to a 0.3% rise, while silver was headed for a 0.9% weekly advance.

At last check, the dollar was trading up 0.2% at 90.44, as gauged by the ICE U.S. Dollar IndexDXY, a measure of the buck against a half-dozen major-developed currencies.

The dollar for the week, meanwhile, was looking at a 0.4% gain, while the 10-year Treasury note yield
TMUBMUSD10Y,
1.098%

has held mostly steady at around 1.10% since last Friday.

Richer yields and a stronger dollar can dull the appeal of owning dollar-priced bullion but both factors have steadied in recent trade.

On Thursday, gold got a lift, pushing yields lower and prices of debt higher, after Federal Reserve Chairman Jerome Powell said that it isn’t time to consider exiting easy-money policies, as the U.S. combats the economic crisis wrought by the COVID-19 pandemic.

“Now is not the time to be talking about exit,” Powell said in a webcast with Princeton University on Thursday.

“With the Fed Chair pledging to provide ample warning time before any such tapering so as to avoid a repeat of the infamous ‘taper tantrum’ of 2013, gold bulls can take heart from the continued central bank support that should limit the precious metal’s downside for a while longer,” wrote Han Tan, market analyst at FXTM, in a research note on Friday.

Over the long-run commodity analysts remain bullish on gold, particularly on the back of outsize U.S. government spending, which could devalue dollars and buttress gold prices.

Biden’s fiscal plan calls for a round of $1,400-per-person direct payments to most households, a $400-a-week unemployment insurance supplement through September, expanded paid leave and increases in the child tax credit and help for states with the COVID-19 vaccine rollout.

On Friday, investors also were digesting a report on December retail sales which fell for a third straight month, dropping 0.7 %. Economists polled by Dow Jones and The Wall Street Journal has forecast a 0.1% decline.



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