Gold futures traded modestly lower Monday morning, as a pickup in Treasury yields and the dollar help to dull appetite for the precious commodity, which has been held in check, amid uncertainties about the spread of omicron and Federal Reserve policies.
The most active February gold contract
GCG22,
-0.23%
GC00,
-0.23%
was off $4.90, or 0.3%, at $1,779 an ounce, following a weekly decline of 0.1% for the most-active contract, according to Dow Jones Market Data.
March silver
SIH22,
-0.96%,
meanwhile, was off 22 cents, or 1%, to trade at around $22.27 an ounce, after putting in a weekly loss of 2.7% on Friday.
Gold rose to end last week as a weaker-than-expected jobs report was seen as unlikely to derail the Fed’s plan to reduce, monthly, market-supportive purchases of Treasurys and mortgage-backed securities, with the report leading a flight to assets perceived as safe.
However, the prospects of higher rates have weighed considerably on gold prices.
Naeem Aslam, chief market analyst at AvaTrade, wrote in a daily note that “investors should note that the Federal Reserve is still sticking to its plan to speed up tapering, which would mean a quicker rise in interest rates.”
“A surge in interest rates increases the opportunity cost of holding the precious metal and hence decreases its appeal,” the analyst wrote.
The 10-year Treasury note
TMUBMUSD10Y,
1.378%
was yielding 1.38%, up from 1.342%, while the dollar was up 0.1%, as gauged by the ICE U.S. Dollar Index
DXY,
+0.06%.
