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James Hyerczyk
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Comex Gold

Gold futures are trading slightly lower at the mid-session on Friday after forming an outside move earlier in the session. The market opened strong but gains were capped by a turnaround in the U.S. Dollar and a slight rise in U.S. Treasury yields. Higher equity markets also helped put a lid on prices. All of this is also putting the market in a positon to close lower for the week.

At 15:32 GMT, December Comex gold is trading 1804.80, down $4.40 or -0.24%.

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Some traders are saying this week’s weakness is being fueled as fears over the rising delta variant COVID-19 cases have eased, driving investors into higher-yielding equities as risk appetite returned.

The focus now shifts to next week’s U.S. Federal Reserve meeting for more clues on monetary policy after the European Central Bank on Thursday pledged to keep interest rates at record lows for some time.

Treasury Yields Climb with 10-year Rate Topping 1.28%

Treasury yields climbed on Friday after U.S. Flash Manufacturing PMI beat expectations. The move was likely limited because of a downside miss by the Flash Services PMI report.

The news wasn’t all that great, however since the Flash Composite PMI Output Index grew at a moderate pace for the second straight month in July.

Treasury yields rebounded having fallen in Thursday’s session, after jobless claims data came in higher than expected. The number of first time unemployment insurance claims filed last week came in at 419,000, versus the 350,000 filings expected by economists.

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US Dollar on Track for Second Week of Gains; Fed Meeting in Focus

The U.S. Dollar was on course on Friday for a second week of gains after a turbulent few days when currencies were buffeted by shifting risk appetite, with the market’s focus now on next week’s Federal Reserve meeting. Although some analysts wondered whether the dollar’s recent rally may be losing momentum.

Short-Term Outlook

Risk appetite among investors remained high on Friday, with U.S. stocks rising, U.S. Treasuries selling off, most commodity currencies well-bid on the day, and the greenback off its peaks.

The market’s next major focus for gold traders is the Fed’s two day policy meeting next week. Since the previous meeting on June 16, when Fed officials dropped a reference to the coronavirus as a weight on the economy, cases have risen.

Many economists, however, still expect the meeting to advance discussions for a tapering of stimulus.

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