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Metals Stocks: Gold set for a weekly gain, despite rising Treasury yields, dollar

Gold futures were modestly higher Friday midday, on track for a near 1.2% weekly gain as traders brushed off typically negative factors like rising Treasury yields and a stronger U.S. dollar.

Gold for June delivery
GC00,
+0.43%

was up $8.1, or 0.4%, at $1,946 an ounce on Comex, leaving it on track for a 1.2% weekly rise. May silver
SIK22,
+0.34%

was up 0.5 cents at $24.78 an ounce, headed for a 0.5% gain for the week.

“Gold is trading around the same level it was yesterday, the day before that, the day before that and so on. Despite the spike in volatility seen elsewhere this week as a result of the hawkish Fed shift, gold has been unmoved,” said Craig Erlam, senior market analyst at Oanda, in a note.

The 10-year Treasury yield
TMUBMUSD10Y,
2.712%

pushed toward 2.7% Friday after trading Thursday at its highest since March 2019. Higher Treasury yields are seen as a negative for gold and other nonyielding assets.

The ICE U.S. Dollar Index
DXY,
+0.11%
,
a measure of the currency against a basket of six major rivals, was on track for a 1.3% weekly advance after trading at its highest since May 2020 earlier in the week. A stronger dollar can be a negative for commodities priced in the unit, making them more expensive to users of other currencies.

Analysts said gold’s role as an inflation hedge appears to be buoying the metal, with an important cost of living updated due Tuesday with release of the March consumer price index.

“The CPI report will be the economic event of the week,” David Donabedian, chief investment officer of CIBC Private Wealth US, in emailed comments Friday. “We expect inflation to surge above 8%. We know the commodity component will spike and will be paying particular attention to the core inflation rate, particularly services and shelter.”

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The Russia-Ukraine war also was seen as a factor for gold, given the metal’s status as a haven.

“There are still major concerns about the Russia-Ukraine war, a more hawkish U.S. Federal Reserve and rising global inflation,” said Jim Wyckoff, senior analyst at Kitco.com, in a Friday note. “However, from a markets perspective, there have been no major developments on those fronts late this week, which has allowed traders and investors to exhibit just a bit more risk appetite.”

In other metals trade, May copper
HGK22,
+0.52%

rose 0.3% to $4.716 a pound. July platinum
PLN22,
+1.99%

was up 1.5% at $972.40 an ounce and June palladium
PAM22,
+8.72%

gained 8.2% to $2,405.50 an ounce.

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