Gold trades at highest in a year, boosted by bruised dollar and sinking Treasury yields

MarketWatch/Rachel Koning Beals/09-08-17

Gold continued its march higher Friday after striking a one-year closing high in the previous session as the dollar and U.S. Treasury yields skidded lower.

The yellow metal gained, and was on track for a roughly 1.7% weekly gain for the most-active futures contract, as continued strength in the euro pushed the buck toward its worst week in more than three months.

…“A lull in top-tier news flow leaves commodities without an obvious catalyst. The S&P 500 SPX, -0.02% is pointing cautiously lower, hinting gold may continue to build higher as risk aversion weighs on bond yields,” said Ilya Spivak, strategist in metals and currencies with Daily FX.

…The widely watched ICE Dollar Index was moving toward a weekly fall of 1.8%, which would be the largest decline since the week ended May 19, according to FactSet data.

Risk-off sentiment hinged in large part on reports that Pyongyang may launch another missile on Saturday as it celebrates North Korea’s Foundation Day. Meanwhile, Hurricane Irma is forecast to make landfall in Florida late Saturday or early Sunday, posing safety and economic concerns so soon after Hurricane Harvey.

Also driving the dollar down and gold higher, the 10-year Treasury yield hit a 10-month low at 2.061% on Thursday, and on Friday it fell to 2.03%. Higher rates can make a currency more attractive to investors. And as for gold, its nonyielding status typically leaves it moving opposite Treasury yields.

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