Gold futures finished higher on Friday to eke out a gain for the week, finding support from a pullback in the U.S. dollar after a recent drop in the metal’s price to a three-week low.
This week’s batch of U.S. inflation reports were seen by some as not alarming enough to force more immediate action from the Federal Reserve.
Price action
-
Gold futures for December delivery
GCZ23,
+0.66% GC00,
+0.66%
gained $13.40, or 0.7%, to settle at $1,946.20 per ounce, with prices for the most-active contract up 0.2% for the week, according to Dow Jones Market Data. -
Silver futures for December
SIZ23,
+1.35%
gained 39 cents, or 1.7%, to $23.39 per ounce, ending 0.9% higher for the week. -
Platinum futures for October
PLV23,
+2.15%
gained $18.40, or 2%, to $929.50 per ounce, for a 3.9% rise on the week, while palladium futures for December
PAZ23,
-0.30%
fell by $2.10, or 0.2%, to $1,252.70 per ounce, ending 5.1% higher for the week. -
Copper futures for December
HGZ23,
-0.63%
declined by 0.5% at $3.80 per pound, but held onto a weekly rise of 2.3%.
Market drivers
Gold is “still able to trade above $1,900 despite the continuation of central bank hikes, and the expectation of those rates staying higher for longer,” said Rupert Rowling, a market analyst at Kinesis Money. That “illustrates how strong the support was for the safe haven asset earlier in the year, with market confidence only creeping back into investors’ approach.”
On Friday, the slight buoyancy of gold has “also been assisted by a slight weakening in the strength of the U.S. dollar, the currency which gold has an inversely correlated relationship with as the metal is typically priced in dollars,” he said in market comments.
After marching to its highest level in six months, the U.S. dollar was taking a pause on Friday, which also contributed to gold’s gains, analysts said.
The ICE U.S. Dollar Index
DXY,
a gauge of the buck’s strength against a basket of rivals, was off by 0.2% at 105.245 in Friday dealings.
Also see: Here’s what the gold-silver price ratio tells us about silver
For the week, gold marked a modest gain as data on U.S. consumer and producer price indexes affirmed that inflation continued to re-accelerate in August, but not by a wide enough margin to alarm markets and central bankers.
What’s more, in Europe, the European Central Bank signaled that it has likely finished raising interest rates after delivering another 25-basis-point hike on Thursday to lift its deposit rate to 4%.
The U.S. Federal Reserve next monetary policy decision will be announced on Wednesday.
“A hawkish tone emanating from next week’s FOMC meeting may be the catalyst for gold to revisit sub-$1,900 domain,” said Han Tan, chief market analyst at Exinity Group. “However, should markets infer dovish clues out of the FOMC policy statement and/or Fed Chair Jerome Powell’s press conference, that could see spot gold carve out a larger gap above $1,900.”
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