Gold Futures Settle Lower As Bond Yields, Dollar Rise

Gold prices drifted lower on Friday and the most active gold futures contract suffered its third weekly loss in a row, as rising optimism about quick economic recovery on the back of buoyant jobs data, and a strong dollar weighed on the commodity.

The Federal Reserve Chairman Jerome Powell’s comments on Thursday that he expects some inflationary pressures in the time ahead contributed a bit to the dollar and bond yields’ surge.

Powell said the recent run-up in bond yields was “notable” and that “disorderly conditions in financial markets” or a broad tightening of financial conditions would provoke a policy change. But he stopped short of saying that recent market gyrations meet those tests.

While the dollar, extending recent gains, rose to a fresh 3-month high today, the yield on the U.S. 10-Year Treasury Note surged past 1.6%, dimming the demand for the safe-haven asset.

The dollar index rose to 92.19 earlier in the day, and despite paring some gains subsequently, was still fairly well above the flat line a little while ago at 91.97, up nearly 0.4% from Thursday’s close.

Gold futures for April ended lower by $2.20 or about 0.1% at $1,698.50 an ounce, the lowest close since early June 2020.

Silver futures for May ended down $0.174 or about 0.7% at $25.287 an ounce, while Copper futures for March settled at $4.0755 per pound, gaining $0.0970 or 2.4%.

Data released by the Labor Department showedn non-farm payroll employment jumped by 379,000 jobs in February after climbing by an upwardly revised 166,000 jobs in January. Economists had expected employment to increase by 182,000 jobs compared to the uptick of 49,000 jobs originally reported for the previous month.

The unemployment rate unexpectedly edged down to 6.2% in February from 6.3 percent in January. Economists had expected the unemployment rate to remain unchanged.

A report from the Commerce Department said the trade deficit widened to $68.2 billion in January from a revised $67.0 billion in December. Economists had expected the trade deficit to widen to $67.5 billion from the $66.6 billion originally reported for the previous month.

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