Gold futures were down on Friday, shedding ground as the US dollar rallied, although market bulls say lower Treasury yields should support the yellow metal.
Gold for August delivery GC00,
the Comex fell $ 4.80, or 0.3%, to $ 1,891.60 an ounce. July silver SIN21,
rose 14.4 cents, or 0.5%, to $ 28.175 an ounce.
Gold rallied slightly on Thursday after data showed that US inflation continued to rise in May, although the yellow metal, traditionally seen as a hedge against inflation, did not initially find support in the news.
Gold “initially fell due to soaring US inflation but was supported by falling US Treasury yields,” said Sophie Griffiths, an analyst at OANDA. The fall in yields amid rising inflation seems illogical, she said, “but as inflation rises, interest rate expectations are not met, which is a welcome moment for gold.”
To read: US Treasury Yields Fall Despite Higher Inflation: Here Are Some Reasons Why
US Dollar Index ICE DXY,
the measure of the currency against a basket of six major competitors rose 0.2%. A stronger dollar can affect commodities valued in that currency, making them more expensive for users of other currencies.
Meanwhile, the popular SPDR Gold Shares ETF GLD,
is trading just above “the tactical decision point at $ 174.66-172.91,” Asbury Research chief market strategist John Kosar wrote Thursday. GLD closed at $ 177.74 on Thursday.
The main uptrend must resume in this area for it to remain in effect, he said. If support persists, the ETF will face upside resistance at $ 182.40 and $ 194.45, he said, while falling through support at $ 174.66 to reach $ 172.91 “will warn of renewed main GLD downtrend in February-April, ”said Kosar.