Gold futures on Thursday traded slightly lower as the U.S. dollar rose, amid a continued downshift in omicron concerns, but a slight retreat inTreasury yields may be limiting the downward pressure on the yellow metal’s price.
February gold GCG22, -0.06% GC00, -0.06% was trading $2.40, or 0.1%, to reach $1,803.40 an ounce, after declining 0.3% on Wednesday. Many technical investors see gold holding above $1,800 as an important level that can signal wavering momentum.
Naeem Aslam, chief market analyst at AvaTrade said that gold’s ability to hold above $1,800, despite the 10-year Treasury note TMUBMUSD10Y, 1.525% rising to above 1.55% at its intraday peak as a plus for gold. Higher yields can dull appetite for bullion which doesn’t offer a coupon.
“In normal circumstances, a rise in treasury yields drags down the price of gold due to a rise in opportunity cost,” Aslam wrote, in a daily note.
“However, this was not the case on Wednesday, when the yellow metal was able to maintain itself above the $1,800 mark because of a lower dollar index, which is floating around its one-month low,” the AvaTrade analyst wrote.
“Gains in the dollar index are being capped as investors are favoring riskier currencies because of declining worries related to the Omicron variant,” he said.
The dollar index was trading less than 0.1% higher at 95.97, as measured by the ICE Dollar Index DXY, -0.02%, and could pave the way for further slight gains for bullion. A weaker dollar can make assets priced in the currency comparatively more attractive to overseas buyers.
Meanwhile, March silver SIH22, +0.18% was virtually unchanged at $22.87 an ounce, following a 1.1% decline on Wednesday.
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