Gold futures rose Friday morning, and are on track for a weekly gain as the U.S. dollar pulled back after recent gains.
Price action
-
Gold for April delivery
GC00,
+0.45% GCJ23,
+0.44%
rose $12.70, or 0.7%, to $1,853.20 an ounce, on track for a 2% weekly rise. -
May silver
SIK23,
+0.81%
was up 1.3% at $21.17 an ounce, headed for a 1.1% weekly gain. -
April platinum
PLJ23,
+0.92%
gained 1.2% to $974.30 an ounce, up 7.3% for the week. June palladium
PAM23,
-0.62%
fell 1% to $1,431 an ounce, leaving it up 3.8% on the week. -
May copper
HGK23,
+0.47%
rose 0.5% to $4.095 a pound, up 3.6% for the week.
Market drivers
Analysts said the U.S. dollar continues to call the tune for gold, with the ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six major rivals, down 0.2% on Friday. The index is down 0.4% for the week, trimming its year-to-date advance to 1.2%, according to FactSet.
The dollar’s bounce in February had weighed on gold. A stronger dollar can be a weight on commodities priced in the unit, making them more expensive to users of other currencies.
The dollar has been the “primary driver” of price action in gold as investors assess the Federal Reserve’s rate path, wrote analyst Gary Wagner at Kitco. The dollar rallied in February, pushing down gold, as a run of hot U.S. labor and inflation data saw traders price in expectations for more aggressive Federal Reserve interest rate increases and largely price out previous expectations for rate cuts by year-end.
Gold may have also found some recent support on fears an aggressive Fed could push the U.S. economy into recession, but a continued rise in U.S. Treasury yields, along with a relatively resilient dollar means upside may be limited, said Christopher Louney, analyst at RBC Capital Markets, in a note.
“While off its 2022 highs, the dollar remains quite strong, but more importantly, rates have continued to rise and are closing in on their 2022 highs with 10-year U.S. Treasuries
TMUBMUSD10Y,
north of 4%,” he wrote.
Rising Treasury yields raise the opportunity cost of holding nonyielding assets, like commodities.
