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Gold Finishes First Trading Week of 2021 Below $1,900 on Firmer Dollar, Treasurys

January 8, 2021 at 17:09 by Andrew Moran

Gold futures are poised to settle the first trading week of 2021 below 2021. The yellow metal is cratering on Friday as the US dollar strengthened and Treasurys popped. In the backdrop at the end of the week were a disappointing December jobs report and the aftermath of chaos in US politics in recent days. Despite inflation fears and uncertainty in the broader market, gold has been slumping.

February gold futures tumbled $55.70, or 2.91%, to $1,857.90 per ounce at 15:41 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold is on track for a weekly decline of 2.3%.

Silver, the sister commodity to gold, is also plunging to close out the trading week. March silver futures plummeted $1.416, or 5.19%, to $25.845 an ounce. The white metal will endure a weekly drop of about 2.6%.

The US Dollar Index, which measures the buck against a basket of currencies, picked up 0.07% to 89.89, from an opening of 89.83. The DXY did breach 90.00 before paring some of its gains. A strong buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

Bond yields have been surging in recent sessions, with the 10-year benchmark Treasury adding 0.043% to 1.114%. The one-year note was unchanged at 0.101%, while the 30-year bond edged up 0.038% to 1.883%.

Investors have also been reacting to last month’s jobs numbers. According to the Bureau of Labor Statistics (BLS), the US economy lost 140,000 jobs in December, leaving the unemployment rate flat at 6.7%. Leisure and hospitality employment shed 498,000 jobs, education and health services sank by 31,000 jobs, and the government trimmed 45,000 from payrolls. Other sectors recorded modest gains, including professional and business services (161,000) and manufacturing (38,000).

Market analysts think that the worst labor report since March could be good news because it would lead to greater fiscal and monetary stimulus and relief from Congress and the Federal Reserve. Since this would inevitably lead to higher inflation, market observers think that gold is oversold, presenting a bargain opportunity for investors.

On the political front, President Donald Trump confirmed that he would not be attending the Inauguration Day ceremony for his successor, President-Elect Joe Biden. This comes as Biden’s 2020 victory was confirmed and the Democrats secured victories in Georgia’s special elections, giving the party full control of the executive and legislative branches.

In other metal markets, February copper futures fell $0.012, or 0.32%, to $3.684 per pound. February platinum futures plummeted $33.20, or 2.95%, to $1,091.40 an ounce. March palladium futures crashed $69.60, or 2.86%, to $2,362.00 per ounce.

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