Gold futures traded lower for a second consecutive session Friday, headed toward a weekly decline of roughly 0.4%, as a strengthening dollar and rising Treasury yields, weighed on the metals complex.
In early action, June gold GCM8, -0.73% was $4.50, or 0.3%, lower at $1,344.30 an ounce, threatening its first back-to-back decline since the two-session drop ended March 28. Though the commodity has mostly traded in a narrow range, the contract is now down some 1% since hitting a 2 ½-month high of $1,360 as recently as April 11.
Silver retreated Friday after starting to play catch-up to gold for much of this week. Early Friday, May silver SIK8, -0.57% shed 14 cents, or 0.9%, to $17.09 an ounce, pulling back from its own 2 ½-month high, hit in the previous session. The contract is headed toward a 2.5% gain for the week, though is still down 0.8% so far in 2018. Last month, gold prices gained 0.7%, while silver prices fell by roughly 0.9%.
The SPDR Gold Shares GLD, -0.71% exchange-traded fund slipped 0.3% premarket, the iShares Silver Trust SLV, -0.68% fell 0.8%, while the VanEck Vectors Gold Miners GDX, -1.69% lost 0.5%.
The dollar gained again, having flipped its week-to-date performance into slightly positive territory. This helped to dull demand for dollar-denominated precious metals. The ICE U.S. Dollar Index DXY, +0.44% was up 0.3% at 90.16 early Friday.
Gold tends to move inversely to the 10-year Treasury note yield TMUBMUSD10Y, +0.83% which shot up to 2.930% on Thursday, the highest since Feb. 23, on rising inflation expectations. The yield was up 1 basis point to 2.92% on Friday. Higher yields can dull the appeal of nonyielding bullion. Noteworthy, however, accelerating inflation can eventually lure investors into the shelter of fiat gold, meaning bond market moves tend to have mixed implications for the metal.
U.S. stocks looked set for a fall at the open Friday, as investors kept a wary eye on rising bond yields and focused on the next batch of earnings.
Read: Here’s why the stock market and commodities are no longer in lockstep
There is no top-tier economic data for release in the session. But Chicago Fed President Charles Evans, a non-voter this year, will give a speech on current economic conditions and monetary policy at 9:40 a.m. Eastern Time.
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Concerns over U.S.-Russian relations, coming talks on the Korean Peninsula, action in Syria over a suspected chemicals-weapons attack and jitters over still-simmering trade conflicts have formed a cocktail of geopolitical worry that has underpinned buying in gold, which tends to prosper in such uncertainty. For now, those worries have lost some of their immediacy though they remain a longer-term factor.
“We have revised up slightly our end-2018 forecast for the price of gold to $1,300 per ounce, from $1,270 previously, to reflect the fact that geopolitical risks have risen considerably since the start of the year and are likely to feed through into higher safe-haven demand,” said Capital Economics analysts in a Friday note.
“That said, we still think that rising U.S. interest rates will lead to lower gold prices later in the year,” the analysts said. “Prices could then bounce back in 2019 when the current Fed tightening cycle comes to an end and it becomes clear that the U.S. economy is facing a cyclical slowdown.”
Elsewhere in the metals market, May copper HGK8, +0.05% rose 0.1% to $3.1365 a pound. July platinum PLN8, -0.83% shed 0.6% to $934.40 an ounce after touching an over three-week high Thursday, while June palladium PAM8, -0.43% lost 1.5% to $1,011.20 an ounce. It settled Thursday at the highest level since late February, with the recent gains tied to U.S. tensions with Russia.
Nickel prices this week hit their highest level since December 2014, on concerns that Russian nickel producer Norilsk Nickel will be included under U.S. sanctions on Moscow that have already led to a rally in aluminum prices.