Gold futures on Thursday were heading slightly lower, a day after settling at the highest price in two months, with the precious metal finishing in positive territory for the first time in four sessions.
A pop in the dollar and an attempted rebound in equities was helping to diminish the appeal of safe-haven gold, which has caught an updraft during a period of heightened concerns about inflation and the prospects for aggressive monetary tightening by central banks.
At last check, February gold
GCG22,
GC00,
was trading $2.60, or 0.1%, lower at $1,840.60 an ounce, following a 1.7% rise a day ago, which brought the most-active contract to the highest level since Nov. 19 on the back of the strongest daily advance since December, according to FactSet data.
The recent move in gold came amid some weakness in the dollar and a pullback in Treasury yields, which have been rising and raising the opportunity cost of owning nonyielding gold over government debt which bears a coupon. The 10-year Treasury yield
TMUBMUSD10Y,
was holding steady at around 1.83% on Thursday, while the ICE U.S. Dollar Index
DXY,
declined 0.2% on Wednesday but was trading up 0.1% on Thursday.
“The price action in gold has been exceptionally bullish too,” wrote Marios Hadjikyriacos, senior investment analyst at brokerage XM, in a daily note. “ Bullion blasted above the $1830 region yesterday to hit a two-month high, capitalizing on the faintest of pullbacks in real yields and the dollar,” the analyst wrote.
“This screams of a market that wants to go higher, as gold took almost no damage while yields soared this week but traded like a rocket the moment they retreated,” Hadjikyriacos said.
Meanwhile, silver for March delivery
SIH22,
was shedding about a penny, or less than 0.1%, to trade at $24.23 an ounce, following a nearly 3.2% gain for gold’s sister metal on Wednesday, which marked the highest value since Nov. 22.
The rate-setting Federal Open Market Committee next gathers on Jan. 25-26 and is expected to set the stage for a series of interest-rate increases, which strategists argue could ultimately weigh heavily on the longer-term outlook for bullion.
