Gold futures finished lower on Thursday for a second session in a row as a stronger-than-anticipated weekly report on U.S. jobless claims and the recent rise in yields on the 10-year Treasury note dulled investment demand.
Higher yields in Treasury bonds can make gold look less attractive because it doesn’t offer a yield and upbeat economic reports lessen gold’s appeal as a haven investment.
Gold for June delivery GCM5, +0.40% fell $8.10, or 0.7%, to settle at $1,182.20 an ounce on Comex, after settling modestly lower on Wednesday, while July silver SIN5, +0.69% fell 21 cents, or 1.3%, to $16.297 an ounce. Read: Chinese demand for silver bullion bars halved last year
Peter Hug, global trading director at Kitco Metals, said the weakness can be attributed to Federal Reserve Chairwoman Janet Yellen’s comments on Wednesday that bond yields could jump sharply as the central bank looks to normalize interest-rate policy.
The Treasury market has seen its longest losing streak since March 2011, pushing yields higher. On Thursday, however, Treasury prices rebounded after the eight-day selloff and yields declined.
Still, “for as long as the correction on the bond markets continues, gold should therefore remain under pressure,” said analysts in a note at Commerzbank Commodity Research.
Meanwhile, the Labor Department reported a better-than-expected figure for weekly jobless claims, prompting gold to lose more ground.
Friday’s much-anticipated jobs report might help buck up gold, the Commerzbank analysts said. “Weak U.S. labor market data could put an end to this correction process tomorrow because that would tarnish the Fed’s optimistic image of the economy and could thus further delay the first interest rate hike,” they wrote.
The dollar DXY, -0.01% was higher against major rivals on Thursday, adding to the pressure on gold. A stronger buck makes dollar-denominated commodities pricier for holders of other currencies. However, the greenback has slumped in recent days, and it is “somewhat puzzling” the dollar’s decline hasn't helped gold and resulted in gold “overcoming the $1,200 per troy ounce mark,” the Commerzbank note said.