Commodity Market: Gold extends losses as US Dollar rebounds from two-week lows with higher US bond yields

Spot Gold extended losses from the prior trading day on Friday, as the US Dollar rebounded from recent two-week lows, supported by a rise in 10-year US bond yields. Still, however, the yellow metal looked set to register its first weekly gain in the past three weeks on hopes of additional fiscal stimulus in the United States.

A stronger US Dollar tends to make Gold more expensive for international investors holding other currencies, while higher bond yields lead to higher opportunity cost of holding the precious metal.

Yesterday’s government data showed a slight drop in weekly jobless claims, though the numbers still remained elevated.

“The U.S. jobs numbers sort of talked some sense of inflation risk out of the market and that may have weighed on gold,” IG market analyst Kyle Rodda was quoted as saying by Reuters.

“The bigger picture should be positive for gold because of the current monetary and fiscal policy mix, but despite all the tailwind gold’s just grinding lower, so it’s not a very constructive view for the time being,” Rodda added.

As of 10:48 GMT on Friday Spot Gold was edging down 0.24% to trade at $1,821.26 per troy ounce, after earlier touching an intraday low of $1,812.63 per troy ounce, or its weakest price level since February 8th ($1,807.86 per troy ounce). The commodity has retreated 1.46% so far in February, following another 2.67% drop in January.

Meanwhile, Gold futures for delivery in April were retreating 0.51% on the day to trade at $1,817.45 per troy ounce, while Silver futures for delivery in March were up 0.15% to trade at $27.087 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was edging up 0.24% to 90.64 on Friday, while rebounding from Wednesday’s two-week low of 90.25.

In terms of macroeconomic data, today Gold traders will be expecting the preliminary results from Thomson Reuters/University of Michigan’s monthly survey on US consumer sentiment for February due out at 15:00 GMT.

Daily Pivot Levels (traditional method of calculation)

Central Pivot – $1,831.46
R1 – $1,841.75
R2 – $1,857.86
R3 – $1,868.14
R4 – $1,878.43

S1 – $1,815.36
S2 – $1,805.07
S3 – $1,788.96
S4 – $1,772.85