Gold Rises Slightly, Dollar and High Yields Trigger Weekly Correction
Gold prices strengthened on Friday (March 6th) as safe-haven demand persisted as the Middle East conflict entered its seventh day. However, today's gains were not enough to prevent gold from its first weekly decline in five weeks, as a stronger dollar and higher Treasury yields continued to exert pressure.
Spot gold was last up around 0.3% at US$5,096.36/ounce, while US gold futures rose around 1% to US$5,126.70. Despite the rebound, gold has fallen around 3% so far this week.
Pressure comes from interest rate repricing. The surge in energy prices amid the conflict has heightened inflation concerns and led markets to trim expectations of a Fed rate cut, strengthening the dollar and acting as a drag on non-yielding gold. The dollar is also expected to post a weekly gain of around 1.4%, reducing gold's appeal to non-USD buyers.
In the bond market, a Treasury selloff is keeping yields high and adding to opportunity cost pressures for precious metals. The 10-year US yield hovered around 4.17% on March 6.
The US-Israel conflict with Iran, which has spilled over into the Gulf region, remains a source of risk premium, including impacts on energy prices and the path of global inflation. The market now awaits the release of the US Nonfarm Payrolls (NFP) to test whether the labor data further reinforces the "higher for longer" narrative or provides room for easing expectations.
Source: Newsmaker.id
