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James Hyerczyk
Comex Gold

Gold futures are trading sharply lower on Thursday, hitting its lowest level since January 19, as a firmer U.S. Dollar dented foreign demand for the dollar-denominated asset. Helping to generate the downside pressure are weaker silver prices, firming U.S. Treasury yields and a less-pessimistic outlook for the U.S. economy.

At 11:01 GMT, April Comex gold is trading $1813.30, down $21.80 or -1.19%.

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The selling could extend into $1787.30 to $1711.70 over the near-term as brokerage clients continue to liquidate their “safe-haven” buys and long positions placed in anticipation of a weaker U.S. Dollar and massive amounts of fiscal and monetary stimulus. Did I miss any reasons speculative bulls were using to place their bullish bets?

Speculative Buying in Silver Subsides

The recent speculative move in silver appears to have worn off since this week’s rally failed to attract enough buyers to sustain a rally over $30. However, this doesn’t automatically mean the rally is over. The market may continue to find support over the near-term, buoyed by hopes global stimulus measures would lead to a pick-up in industrial demand.


10-Year Treasury Yields at More than Three-Week Peak

U.S. Treasury yields continued to climb on Thursday morning, as investors watched for progress on an economic relief plan, and also following better-than-expected private jobs data on Wednesday.

The yield on the benchmark 10-year Treasury note rose to 1.139% at 08:30 GMT, while the yield on the 30-year Treasury bond advanced to 1.927%.

Treasury yields continued to rise, after data released Wednesday showed private companies added 174,000 jobs in January, which was well above the 50,000 payrolls estimate from economists surveyed by Dow Jones. It also marked an improvement from the 78,000 decline in private payrolls in December.

Rising yields tends to weigh on gold prices because the precious metals doesn’t pay any interest to hold it.

US Dollar Trades Near Two Month Peak

The U.S. Dollar continued to rise on Thursday as pessimism about the U.S. economic outlook recedes before the release of important data on the jobs market.

Sentiment for the dollar has improved recently as progress in coronavirus vaccinations, moves by U.S. President Joe Biden to pass more fiscal stimulus, and improving economic data forced some bearish investors to give up their short positions.

The dollar faces another test on Friday with the release of non-farm payrolls data, which will help confirm whether the world’s largest economy has been able to shrug off a dip in growth toward the end of last year.

Data due on Friday is forecast to show the U.S. economy added 50,000 jobs in January, which would be a mild recovery from shedding 140,000 jobs in the previous month as a spike in coronavirus infections curbed economic activity.

Daily Forecast

Later today at 13:30 GMT, gold traders will get the opportunity to react to the latest Labor Department report on weekly jobless claims. Economists polled by Dow Jones expect first-time claims to total 830,000 for the week that ended January 30, which would mark a slight reduction on 847,000 new claims made the previous week.

Figures for factory orders in December are due to be released at 15:00 GMT.

Investors’ focus also is expected to remain on a $1.9 trillion U.S. coronavirus aid plan, which was passed by the U.S. House without Republican support.

For a look at all of today’s economic events, check out our economic calendar.
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