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Metals Stocks: Gold futures slide early Friday as stocks and Treasury yields step up

Gold futures were falling early Friday, on pace to halt a three-session rise, as Treasury yields and stocks rose. However, the recent run-up in the precious metal put it in position to post the best weekly advance in over 5 months.

December gold
GCZ21,
-1.59%

GC00,
-1.59%

was trading 1.3%, or $20.10, lower at $1,775.10 an ounce on Comex, after picking up 0.2% on Thursday and settling at the highest since Sept. 14, FactSet data show.

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For the week, gold is up 1%, which would mark its steepest weekly climb since Aug. 27.

Gold’s gains over the stretch have been tenuous, analysts say, but partly supported by a more subdued dollar and some retreat in yields for government debt even though the Federal Reserve plans to start to wind down its bond buying program now that the economy is recovering from the pandemic.

The 10-year Treasury note yield
TMUBMUSD10Y,
1.566%

was at around 1.54%, compared with 1.604% at the end of last week. Meanwhile, the dollar, as gauged by the ICE U.S. Dollar Index, was down 0.1% on the week.

Both factors have provided a pathway higher for assets, such as gold, which are priced in dollars and that don’t offer a coupon like government debt.

“Gold rallied to test the key $1800 hurdle, where it was met with some resistance on Thursday. But will the metal be able to break this important resistance area today?” wrote Victor Argono, senior analyst at EXANTE.

Jim Wyckoff, senior analyst at Kitco.com, said that gold’s downside resistance level is closer to around $1,750, if investors are looking for a breaking point in the metal’s move.

“Bears’ next near-term downside price objective is pushing futures prices below solid technical support at this week’s low of $1,749.90,” the Kitco analyst wrote.  

Gold held at lower levels early Friday after a report on U.S. retails sales for September showed a climb of 0.7% on the month, above forecast. Retail sales, excluding autos and gas prices, increased 0.8% on the month. Separately, a reading of business conditions in the New York area, Empire State Manufacturing Index was at 19.3.

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