Investing.com - Gold prices advanced for a second straight day on Friday, halting a six-day slide after a tumble to June lows.
But despite gold’s ability to staunch more bleeding, support for the so-called inflation hedge and safe haven was feeble at best, say commodities strategists and those who spend their day studying variables and potential direction for the yellow metal.
At Friday’s settlement, gold for April delivery on Comex settled up $2.40, or 0.1%, at $1,777 per ounce. For the week though, it lost about 2.5%.
All in, the benchmark gold futures contract lost $60, or 3.5%, since the settlement of Feb. 10. Friday’s tumble took it to 1,759.15, its lowest since the week to June 12.
“Gold is having a torrid time,” said Craig Erlam, markets’ strategist for the online brokerage, OANDA.
“Even the pullback we've seen in gold the last couple of days couldn't save it, with higher real yields in the U.S. instead piling the misery on the yellow metal. It fell below $1,760 today, the lowest it's been since early July, in another sign that its near-term outlook is looking far from bright.”
Fawad Razaqzada, an analyst at Think Markets, who regularly plots direction for gold in a macro environment, agreed with Erlam that things haven’t been — and aren’t looking — great for the bullion crowd.
“It has been another amazing week for cryptos, copper and the pound, mixed one for equities equities and crude oil, and (a) bad week for gold,” Razaqzada wrote in his weekly markets wrap and lookahead.”
Due to the varied action, “investors wondered whether rising bond yields were a good thing (as they point to better economic conditions) or a bad thing (as they reduce the likelihood for further stimulus)”, Razaqzada added.
The idea of gold as an inflation hedge, or safe-haven against most economic and political troubles has been repeatedly challenged in recent months, since vaccine breakthroughs for Covid-19 pressured the yellow metal off August record highs of nearly $2,090.
With President Joe Biden embarking on a new $1.9 trillion stimulus after the near $4 trillion issued under his predecessor Donald Trump, the potential fiscal U.S. deficit and debt under such spending should weigh on the dollar rather than gold.
Yet, the Dollar Index has risen instead, spurred by a spike in the U.S. 10-year Treasury yield, dealing gold a series of setbacks.