Futures for gold on Friday were falling sharply, giving ground to trade below $1,900 an ounce as yields for U.S. government bonds extended a weekly climb, eroding some appetite for bullion which competes against haven sovereign debt for buyers.
A weaker-than-expected December jobs report failed to provide much of lift for metals on the session.
The 10-year U.S. Treasury yield
TMUBMUSD10Y,
1.094%
was nearing 1.1%, after ending 2020 at 0.926%, marking a powerful uptrend for rates for the benchmark note in the first full week of 2021.
Investors also will watch for a report on the health of the U.S. jobs market, which could influence trade in precious metals.
The session’s slump for gold prices followed a pair of political wins by Democratic candidates in Senate runoff races in Georgia earlier in the week that paved the way for further fiscal relief measures from President-elect Joe Biden after he takes office on Jan. 20.
February gold
GCG21,
-1.30%
GC00,
-1.30%
was trading $21.70, down 1.1% at $1,892 an ounce, which would put the contract around its lowest level since the end of December, according to FactSet data.
“This may well just be a bit of a catch up move, with yields having risen all week following the Democrats victory in Georgia which gave them control of the Senate and completing the clean sweep,” wrote Craig Erlam, senior market analyst at Oanda, in a daily research note.
Silver for March delivery
SIH21,
-2.00%
SI00,
-2.00%,
meanwhile, was trading 68 cents, or 2.5%, lower at $$26.58 an ounce.
For the week, gold was on track for a weekly skid of 0.3%, while silver was set for a weekly slide of less than 0.1%, based on the most-active contracts.
A closely watched employment reading showed that the U.S. lost jobs in December for the first time in eight months as the spread of coronavirus and variants of the COVID-19 forced fresh lockdowns in parts of the country.
Businesses and government shed 140,000 jobs last month, the Bureau of Labor Statistics said Friday. The official unemployment rate, meanwhile, was unchanged at 6.7%.
Market participants said that the lack of upside reaction from gold may be due to expectations that the jobs report would be softer and a bullish economic outlook that could hurt gold prices in the near term.
“Today’s big miss on the jobs consensus forecast did not significantly move markets. Reason: Traders and investors are so keenly focused on the bullish aspects of the likely end of the raging pandemic this year and the ensuing expected booms in world economies,” wrote Jim Wyckoff, senior analyst at Kitco.com.
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