Gold futures edged lower on Friday, failing to get a lift from a round of weak economic data out of China or a softer U.S. dollar as bears look for the precious metal to continue its retreat from more-than-six-year highs set last month.
Gold briefly above $1,560 early last month and remains up nearly 17% in the year to date, but the metal has trimmed those gains as U.S. Treasury yields edged higher. Falling yields can be a boon for non-yielding assets by reducing the opportunity cost of holding them, while rising yields can be a negative.
Bears contend a less aggressive-than-expected Federal Reserve could keep gold under pressure.
“Looking ahead, we expect investors to pare back further their expectations for monetary easing in the U.S.,” said Caroline Bain, chief commodities economist at Capital Economics.
“In our view, markets are still anticipating too many rate cuts from the Fed. Meanwhile, a stabilization in government bond yields outside of the U.S. should halt the increase in the level of negative-yielding debt, reducing the investment appeal of gold,” she said.
China’s National Bureau of Statistics said growth of the world’s second-largest economy slowed to 6% growth in the third quarter from a 6.2% pace in the second quarter, and the slowest pace since the early 1990s. The pace was in the middle of the central government’s full-year target for gross domestic product, as business investment continued to deteriorate.
December copper HGZ19, +1.33% rose 1.2% to $2.6275 a pound.