Gold prices held steady, weighed on by a firm dollar and rise bond yields

(1) Gold prices struggled to gain momentum in thin trading on Friday and are currently trading in a narrow range around $2,033 as Chinese markets are closed for the Lunar New Year holiday, while a stronger dollar and U.S. Treasury yields rise offset safe-haven demand from lingering worries in the Middle East. (2) The Shanghai Futures Exchange will be closed from February 9 to 16 due to the Spring Festival holiday. (3) Spot gold is down 0.32% so far this week. The U.S. dollar index is up 0.2% so far this week and is on track for a fourth straight weekly gain. The yield on the 10-year Treasury note is up about 11 basis points so far this week to 4.15%. (4) U.S. jobless claims fell slightly more than expected last week, suggesting that the labor market remains strong despite the recent surge in companies announcing layoffs. This further weighed on Fed rate cut expectations in March and May, weighing on gold prices. (5) But lingering concerns about the situation in the Middle East, Israeli forces bombed parts of the southern border city of Rafah on Thursday after Israeli Prime Minister Benjamin Netanyahu rejected Hamas’s ceasefire proposal. This still provides safe-haven support for gold prices. (6) The focus will turn to next week’s U.S. consumer inflation data after Fed officials said they would hold off on rate cuts until they have more confidence that inflation will fall to 2%.