Gold climbs, headed for biggest daily gain in April

Fundamental influences on gold are “turning positive as inflation expectations are on the rise again…bond yields have retreated from recent highs, and the dollar rally has paused” its rise, said Tyler Richey, co-editor at Sevens Report Research, in Thursday’s newsletter. “If all of those developments continue in their current directions, gold should breakout,” with the next upside target being around $1,805.”

June gold GCM21, +0.92% GC00, +0.92% traded $16.90, or 1%, higher at $1,758.50 an ounce on Comex, poised for the largest one-day dollar and percentage rise since March 31, FactSet data show. Prices posted a loss of nearly 0.1% on Wednesday, which was the first daily decline in five sessions. Prices have registered losses in each of the past three months.

Gold-backed exchanged-traded funds lost 107.5 metric tons in March, marking outflows the fourth time in five months, according to a report from the World Gold Council Thursday. The report also said March was “second month in a row in which net outflows ranked the top 10 worst outflows historically.” 

The gold-backed SPDR Gold Shares ETF GLD, +1.14% was up 1.1% in Thursday dealings. It had lost 1.1% in March.

“The perceived opportunity cost of holding gold was impacted directly by rising interest rates throughout Q1 2021 and though it remains a concern for investors heading into Q2, higher inflation expectations may provide tailwinds for gold in the short term,” said Juan Carlos Artigas, head of research for the World Gold Council.

On Thursday, the 10-year Treasury note yield was steady at 1.65%, while the dollar was down 0.4%, poised for a weekly loss of 0.9%, as gauged by the ICE U.S. Dollar Index DXY.

“One of the main drivers of the recent sell-off in gold has been the ongoing rise in US Treasury yields as the market continues to price in the inflationary effect of the US fiscal and monetary largesse,” wrote Nick Cawley, strategist at DailyFX.com.

Meanwhile, Powell will give a speech on the world economy at 12 p.m. Eastern at the annual spring meetings of the International Monetary Fund and World Bank in Washington, which could move bullion prices. The comments from the Fed chair come a day after the release of minutes from the Fed’s March 16-17 policy meeting on Wednesday.

The account of that March meeting show that it would be “some time” before the Fed started tapering its asset purchases, a decision that would hinge on the realization of substantial further progress toward the Fed’s inflation and employment goals.

Rounding out action on Comex Thursday, May silver SIK21, +1.28% tacked on 1.2% to $25.56 an ounce and May copper HGK21, +0.97% added 0.5% to $4.08 a pound.

July platinum PLN21, +0.28% edged up by 0.1% to $1,233.10 an ounce and June palladium PAK21, traded at $2,637.50 an ounce, up 0.6%.