Apr gold (GCJ21) on Thursday closed up +2.20 (+0.12%), and March silver (SIH21) closed down -0.237 (-0.87%).
Gold and silver prices on Thursday settled mixed. Precious metals were under pressure Thursday from strength in global government bond yields. Silver prices also fell back on global economic concerns and mixed U.S. data. Gold prices posted modest gains Thursday due to a weaker dollar and a sell-off in stocks, which boosted the safe-haven demand for gold.
Higher global government bond yields are bearish for gold as the higher yields may prompt investors to move out of non-interest-paying gold and into government bonds. The 10-year UK gilt yield rose to a 10-3/4 month high Thursday of 0.650%, and the 10-year German bund yield rose to an 8-1/4 month high of -0.324%.
Thursday's U.S. economic data was mixed for metals. Data that was bearish for gold but bullish for industrial metals demand and silver prices included an unexpected +10.4% m/m increase in U.S. Jan building permits unexpectedly to a 14-1/2 year high of 1.881 million, stronger than expectations of a decline to 1.680 million. Also, the U.S. Feb Philadelphia Fed business outlook survey fell -3.4 to 23.1, stronger than expectations of a decline to 20.0.
U.S. economic data on Thursday that was supportive for gold but negative for industrial metals demand and silver prices included the unexpected +13,000 increase in U.S. weekly initial unemployment claims to a 4-week high of 861,000, showing a weaker labor market than expectations of a decline to 773,000. Also, U.S. Jan housing starts fell -6.0% m/m to 1.580 million, weaker than expectations of a decline to 1.660 million.
Stronger-than-expected U.S. import prices were supportive for gold demand as an inflation hedge after Thursday's data showed U.S. Jan import prices ex-petroleum rose +0.9% m/m, stronger than expectations of +0.4% m/m and the largest increase in 10 years.
The account of the Jan 20-21 ECB meeting was supportive for gold but negative for industrial metals demand and silver prices. The account of the meeting stated that "the fast rebound in growth foreseen in the December staff projections might be too optimistic, with growth in Q2 of 2021 possibly at risk from extended lockdowns."
Gold has support from the Covid pandemic, which is dovish for central bank policies. However, the pandemic is negative for industrial metals demand and bearish for silver prices. Globally, Covid infections have risen above 110.537 million, and deaths have exceeded 2.443 million.
Safe-haven demand and dovish central bank expectations have sparked fund buying of precious metals in recent months. However, long liquidation has set in gold after long gold positions in ETFs fell to a 6-3/4 month low Wednesday, down from October's record high of 3,459.8 metric tons (data since 2002). Long silver positions in ETFs soared to a record high Feb 2 of 1.017 billion troy ounces (data from 1990), although long silver positions fell to a 2-week low last Friday.
Precious Metals Settle Mixed On Weak Stocks And Higher Global Government Bond Yields (barchart.com)
