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James Hyerczyk
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Gold

Gold futures are trading slightly lower at the mid-session on Friday, up from earlier losses as the U.S. Dollar retreated from an earlier high. Helping to keep a lid on prices, however, was a surge in U.S. Treasury yields.

Today’s intraday price action suggests traders may have been reacting to news out of Washington where multiple House committees have approved parts of Democrats’ $1.9 trillion coronavirus relief plan as the chamber moves to pass the full package by the end of the month.

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At 17:46 GMT, April Comex gold futures are trading $1822.60, down $4.20 or -0.23%.

According to CNBC, the Ways and Means Committee advanced a critical portion of the legislation on Thursday night. It would send $1,400 direct payments to most Americans, extend key unemployment programs through late August and give families up to $3,600 a year per child.

US Dollar Pulls Back after Showing Early Strength

The U.S. Dollar turned negative for the session after giving back earlier gains. This helped trigger an intraday short-covering rally in gold.

The greenback was up early in the day for a second straight session after falling since the February 5 U.S. Non-Farm Payrolls report proved to be a disappointment for dollar bulls. The two day rally may have been fueled by a slight dip in risk sentiment with stocks and some commodity prices lower. We may have also seen some position-squaring ahead of the long weekend in U.S. markets.

Financial markets are closed on Monday for President’s Day.

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Treasury Yields Rise to End the Week

U.S. Treasury yields spiked higher on Friday, perhaps capping gains in the gold market. Weak demand for new 30-year bonds in an auction in the previous session triggered the surge in rates.

Short-Term Outlook

Gold prices remain supported by expectations for a weaker U.S. Dollar alongside real yields remaining low or negative, but without a catalyst, the precious metal is having a hard time sustaining any upside momentum.

President Joe Biden’s $1.9 trillion U.S. coronavirus relief package is providing some support, but since the idea has been floated out there for nearly a month, it may already be priced into the market.

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