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Gold Logs First Weekly Loss Since June As Higher Yields Impact Metals

August 14, 2020 at 18:16 by Andrew Moran

Gold futures logged their first weekly loss since June as higher Treasury yields impacted the metals market to close out the trading week. The yellow metal has been on a roller coaster ride as it hit an all-time high and then crashed below $1,900, only for gold prices to reclaim their gains. Should gold bugs be prepared for another whirlwind week?

December gold futures tumbled $20.20, or 1.03%, to $1,950.20 per ounce at 18:00 GMT on Friday on the COMEX division of the New York Mercantile Exchange. Gold prices will record a weekly slide of 4.7%, lowering their year-to-date surge to a little more than 28%.

Silver, the sister commodity to gold, is also bleeding red ink to end the trading week. September silver futures fell $1.583, or 5.71%, to $26.135 per ounce. The white metal will suffer a weekly drop of 8%, bringing its impressive YTD rally to below 46%.

The big development for metal commodities had been climbing Treasury yields that touched their best levels in two months. The benchmark 10-year Treasury yield traded at 0.703%, up from 0.562% from the same time a week ago. If investors can receive higher interest on an asset, they are more likely to hold bonds than non-yielding bullion.

A weaker greenback capped gold’s loss on Friday. The US Dollar Index, which measures the buck against a basket of currencies, slipped 0.26% to 93.09, from an opening of 93.22. The index recorded a 0.35% weekly loss, adding to its decline of 3.4% so far this year.

But analysts are looking ahead to next week, forecasting that gold could reignite its rally based on disappointing US economic data. Retail sales rose 1.2%, falling short of the 1.9% market forecast. Industrial production dropped at an annualized rate of 8.2% in July, while manufacturing output contracted 7.7% year-over-year last month. Capacity utilization did rise 2% to 70.6% last month, coming in slightly better than the projection of 70.3%.

Overall, market observers believe gold could face a consolidation following the asset’s meteoric ascent.

In other metal commodities, September copper futures tacked on $0.0475, or 1.7%, to $2.855 a pound. September platinum futures shed $23.60, or 2.4%, to $959.40 per ounce. September palladium futures plummeted $72.40, or 3.27%, to $2,144.39 an ounce.

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