Price of Gold Fundamental Daily Forecast – Flat Trade Mirroring Dollar Price Action; Higher Yields Cap Gains

Gold is trading slightly shortly after the regular session opening on Friday, putting it on course for its first weekly decline in three. The market is being pressured by higher U.S. Treasury yields and a stronger U.S. Dollar. The market is clawing back some of its earlier losses in a move fueled by weaker than expected economic data.

At 13:07 GMT, June Comex gold is trading $1726.50, down $0.40 or -0.02%.

US Economic Data

On the inflation front, the core personal consumption expenditure price index, which strips out volatile food and energy prices, rose 0.1% month over month, matching expectations from economists polled by Dow Jones. Year over year, the gauge climbed 1.4%, slightly lower than a 1.5% estimate.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, dropped 1.0% last month after rebounding 3.4% in January, the Commerce Department said on Friday.

Personal income tumbled 7.1% after surging 10.1% in January. Economists polled by Reuters had forecast consumer spending decreasing 0.7% in February and income declining 7.3%.

Treasury Yields Rise

The 10-year U.S. Treasury yield is rising but off its high as the latest inflation data showed tamed price pressures.

The yield on the benchmark 10-year Treasury note last traded up 4 basis points to 1.662%. The rate jumped 6 basis points earlier.

The rise in bond yields came after an auction of 7-year notes showed weaker appetite for longer-dated debt. The auction of $62 billion 7-year Treasury notes on Thursday outperformed demand in a sale last month but was still weak, according to a Reuters report.

Yields were also driven higher after Federal Reserve Chairman Jerome Powell hinted that the central bank would eventually roll back its support for the economy.

Dollar Buoyant as Economic Outlook Brightens

The dollar held near its highest since November against major currencies on Friday, helped by optimism over the state of the U.S. economy and the rollout of coronavirus vaccines.

On Thursday, the dollar index hit a four-month high. In further signs of strength, the dollar rose 0.6% to 109.820 against the Japanese Yen, its highest since June. Against the Swiss Franc, it rose to its highest since July, holding onto a 0.5% gain from the previous session.

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