Gold prices experienced a decline within a one-week low on Friday and are likely to record a weekly drop, due to the influence of a stronger dollar and a rise in U.S. bond yields. The value of spot gold fell by 0.1% to $2,014.09 per ounce, with U.S. gold futures remaining relatively unchanged at $2,019.80.
The recent surge in the value of the dollar to a one-month high is making gold less appealing for investors who hold other currencies, while higher 10-year Treasury yields have been reducing the appeal of zero-interest bullion.
Despite this, Bob Haberkorn, a senior market strategist at RJO Futures, believes that the dollar’s strength is limited due to the debt ceiling issues that are likely to persist for the next few weeks. Janet Yellen, the Treasury Secretary, has indicated that there is still uncertainty around when the Treasury will run out of cash to pay U.S. government debts, which could happen as early as June 1.
Gold is seen as a safe-haven asset, and typically gains value during periods of economic or financial uncertainty. Meanwhile, bullish sentiment remains strong in the gold market, with traders having already priced in a 25-basis-point cut by the Federal Reserve by September.
However, Fed Governor Michelle Bowman has reiterated the central bank’s position on raising rates if it is necessary to fight inflation. Spot silver experienced a 0.9% decline to $23.95 per ounce, marking its worst week in seven months, while platinum and palladium fell by 3.5% and 2.5%, respectively.
The drop in the value of silver was attributed to the dollar’s rebound and concerns over China’s economic recovery by Fawad Razaqzada, a market analyst at City Index.
If you want to further analyze the gold chart click here