James Hyerczyk
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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.


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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