Gold prices rise, head for best weekly gain of the year

“Gold continues to derive strength from falling Treasury yields, a weaker dollar, and worsening coronavirus conditions in Europe,” said Lukman Otunuga, senior research analyst at FXTM.

“Should Treasury yields continue to retreat and the dollar extends losses in the week ahead, this could push gold prices towards the $1,800 level,” he told MarketWatch.

Meanwhile, “the rising tensions between the United States and Russia may be the icing on the cake for gold bulls,” said Otunuga. President Joe Biden on Thursday expelled some Russian diplomats and imposing new sanctions, partly in retaliation for Russia’s interference in last year’s presidential election.

June gold GCM21, +0.71% GC00, +0.71% was trading $11.50, or 0.7%, higher at $1,778.30 an ounce on Comex, following a 1.8% gain on Thursday.

For the week, gold was on pace for a weekly rise of around 2%, which would mark its biggest weekly advance since the period ended Dec. 18, 2020, according to Dow Jones Market Data.

The 10-year Treasury note BX:TMUBMUSD10Y was yielding 1.57%, below its recent range between 1.60% and 1.75%. A fall in government debt yields can boost appetite for precious metals which don’t earn a coupon.

The dollar was down 0.2% at 91.556, as gauged by the ICE U.S. Dollar Index DXY, -0.15%, a measure of the buck against a half-dozen currencies. The dollar is down 0.7% so far this week and off 1.8% in April so far. A weaker dollar can make dollar-pegged assets more appealing to overseas buyers.

Economic data from the two largest economies in the world also remain “highly encouraging and may boost global sentiment,” Otunuga said.

It has also been “a solid start to earnings season and if this remains a key theme, risk-on could become the name of the game,” he said. That suggests potential for a rise in U.S. benchmark stock indexes, which could lure some investors away from gold.

Although the trend for gold is turning bullish on the daily charts, “gold bears could still make an appearance,” Otunuga said.

In related news, China has given domestic and international banks permission to import large amounts of gold into the country, according to Reuters, which cited five sources familiar with the matter.

That follows a report from Reuters citing the Xinhua news agency on Monday that said Chinese Premier Li Keqiang wanted to strengthen control of raw materials to ease the cost pressure of companies. That put pressure on Chinese steel futures earlier this week.

Among other Comex metals, palladium was a standout, with most-active futures prices poised to notch another record settlement.

June palladium PAM21, +0.92% was up 0.8% at $2,760 an ounce after settling Thursday at a record high of $2,739.40.

See: Why rhodium has stretched a rally that saw prices for the metal nearly triple last year

Production challenges at the world’s largest palladium producer Norilsk Nickel NILSY, +2.57% and steady production in South Africa have kept supplies tight, R. Michael Jones, chief executive officer of Platinum Group Metals Ltd. PLG, +4.46%.

July platinum PLN21, +0.33% was also up 0.7% at $1,209 an ounce. May silver SIK21, +0.54% tacked on 0.6% to $26.13 an ounce, but May copper HGK21, -1.11% fell 0.7% to $4.19 a pound.