Gold: Sharpest Weekly Loss in Six as Dollar, Yields Bolt Higher By

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By Barani Krishnan – A ramping dollar and U.S. Treasury yields gave little respite on Friday to gold prices trying to rebound from the previous day’s meltdown, with the yellow metal settling down for a third day in a row and booking its worst weekly loss in six.

U.S. gold futures’ most active contract, , settled down $5.30, or 0.3%, at $1,751.40 per ounce on New York’s Comex.

For the week, it fell 2.3%, its most since the week to July 29. December gold slumped $50 at one point in Thursday’s session, to a five-week bottom of $1,745.50. The meltdown in gold came as rival dollar catapulted on data showing upbeat U.S. retail sales for August that put the economy in ebullient light after weeks of challenging data from Covid’s Delta variant.

The , which pits the greenback against the euro and five other major currencies, rose 0.7% over the last two sessions to reach a three-week high of almost 93.200. The yield on the rose for a third day in a row, also weighing on gold.

“Gold’s worst enemy is surging Treasury yields and right now that trade is gaining momentum,” said Ed Moya, head of research for the Americas at online trading platform OANDA. “Gold is still vulnerable to technical selling and will not likely attract buyers until $1,700.”

Gold is also in an inflection point ahead of next week’s Federal Reserve meeting that could revisit the subject of taper for the central bank’s stimulus program that has juiced stock prices over the past 18 months. Chairman Jay Powell and his senior most Fed colleagues have so far issued mixed messages on the taper, with the broad market consensus that any trimming of the central bank’s monthly bonds-asset buying may not occur until November.

An absence of any immediate announcement on the taper could put a cap on the dollar and Treasury yields and extend a lifeline to gold.

Even so, gold may not be able to sustain a rebound until it meaningfully recaptures the $1,800 level, said Sunil Kumar Dixit, chief technical strategist at SK Charting in Kolkata, India. “The main trend changes only upon a decisive trade above the $1,835 zone, and that has witnessed multiple failures,” Dixit said.

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