Metals Stocks: Gold edges lower as dollar bounces

Gold futures edged lower Friday, losing ground as the U.S. dollar edged higher, though market bulls said the slide in Treasury yields should underpin the yellow metal.

Gold for August delivery


fell $4.80, or 0.3%, to $1891.60 an ounce on Comex. July silver

rose 14.4 cents, or 0.5%, to $28.175 an ounce.

Gold rose modestly on Thursday after data showed U.S. inflation continued to run hot in May, though the yellow metal, traditionally seen as an inflation hedge, didn’t initially find support on the news.

Gold “fell initially on surging U.S. inflation, but found support from falling U.S. Treasury yields,” said Sophie Griffiths, analyst at OANDA, in a note. Yields falling on rising inflation appears counterintuitive, she said, “but as inflation is surging interest rate expectations are not, which is a sweet spot for gold.”

Read: U.S. Treasury yields fall despite higher inflation: Here are some reasons why

The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, rose 0.2%. A stronger dollar can weigh on commodities priced in the currency, making them more expensive to users of other currencie

Meanwhile, the popular SPDR Gold Shares ETF

was trading just above a “tactical decision point at $174.66 to $172.91,” wrote John Kosar, chief market strategist at Asbury Research, in a Thursday note. GLD closed Thursday at $177.74.

A major uptrend must resume from that area for it to remain valid, he said. If support holds, the ETF faces overhead resistance at $182.40 and $194.45, he said, while a fall through support at $174.66 to $172.91 “would warn that GLD’s previous February-April major downtrend is resuming,” Kosar said.

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